00 720000 72000 marketingandother 240000150 360000

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Unformatted text preview: 240,000 $6.00 $3.00 1.50 $4.50 Differential New $1,440,000 + $ 91,200* 264,000 $5.80 $1,531,200 Revenue Variable costs Manufacturing 240,000 $3.00 720,000 + 72,000 Marketing and other 240,000 $1.50 360,000 + 36,000 Variable costs 1,080,000 + 108,000 Contribution margin 360,000 – 16,800 Fixed costs Manufacturing $0.50 20,000 12 mos. = 120,000 –– Marketing and other $0.90 240,000 216,000 –– Fixed costs 336,000 — Operating income $ 24,000 – $ 16,800 *Incremental revenue: $5.80 24,000 $139,200 Deduct price reduction $0.20 240,000 48,000 $ 91,200 Variable 264,000 $3.00 792,000 264,000 $1.50 396,000 1,188,000 343,200 120,000 216,000 336,000 $ 7,200 4 3. 4. (a) (c) $3,500 If this order were not landed, fixed manufacturing overhead would be underallocated by $2,500, $0.50 per unit 5,000 units. Therefore, taking the order increases operating income by $1,000 plus $2,500, or $3,500. Another way to present the same idea follows: Revenues will increase by (5,000 $3.50 = $17,500) + $1,000 $18,500 Costs will increase by...
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This note was uploaded on 01/23/2014 for the course TELFER adm3346 taught by Professor Collier during the Winter '12 term at University of Ottawa.

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