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Author Question: State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over the past ... (Read 137 times)

hbsimmons88

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State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over the past quarter. The past three months of information for Model A02777 are summarized below: 

Sales (1,100 units)$470,000
 Manufacturing costs:
Direct materials160,000
Direct labor ($15 per hour)80,000
Overhead150,000
Operating loss($80,000)

Overhead costs are 75% variable and the remaining 25% is depreciation of special equipment for model A02777 that has no resale value. 

If Model A02777 is dropped from the product line, operating income will ________.
◦ increase by $80,000
◦ decrease by $117,500
◦ increase by $37,500
◦ decrease by $80,000


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Marked as best answer by hbsimmons88 on Mar 6, 2021

ankilker

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hbsimmons88

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Reply 2 on: Mar 6, 2021
Gracias!


tuate

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Reply 3 on: Yesterday
Wow, this really help

 

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