Chapter11

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 5,000 $3.00 (15,000) Fixed overhead will not change – Change in operating income $ 3,500 Note that this answer to (3) assumes that variable marketing costs are not influenced by this contract. These 5,000 units do not displace any regular sales. $4,000 less ($7,500 – $3,500) Government Contract As above $3,500 Regular Channels Sales, 5,000 $6.00 $30,000 Increase in costs: Variable costs only: Manufacturing, 5,000 $3.00 $15,000 Marketing, 5,000 $1.50 7,500 22,500 Fixed costs are not affected Change in operating income $ 7,500 5. (b) $4.15 Differential costs: Variable: Manufacturing $3.00 Shipping 0.75 $3.75 10,000 Fixed: $4,000 ÷ 10,000 0.40 10,000 $4.15 10,000 Selling price to break even is $4.15 per unit. $37,500 4,000 $41,500 5 11‐37 (40 min.) Optimal product mix. In order to maximize OmniSport’s profitability, OmniSport should manufacture 12,000 snowboard bindings, manufacture 1,000 pairs of skates, and purchase 6,000 pairs of skates from Colcott Inc. This combination of manufactured and purchased goods maximizes the...
View Full Document

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.

Ask a homework question - tutors are online