Our company manufactures and sells calculators for $90 each. A major University has offered us $70 per calculator for a one-time
1 answer:
Answer:
Increase in operating income by $5,000
Explanation:
Firstly, we shall compute the additional cost of this order,
Variable Cost = Direct material + Direct Labor + Variable factory overhead
= $25 + $20 + $15 = $60
Note: Fixed cost will not form part of this decision, as the company has additional capacity lying idle, thus no additional fixed cost will be incurred, and the fixed cost allocated i.e. $12 per unit is not relevant, as is just allocation and not incurred, it is a kind of sunk cost allocated.
Relevant cost = $60 per unit
Selling price per unit = $70 per unit
Contribution to profit = $70 - $60 = $10 per unit
Total increase in operating income = $10 500 = $5,000
Thus operating income will increase by this amount.
Increase in operating income by $5,000
You might be interested in
Answer:
2.32%
Explanation:
The formula for bond equivalent yield is in the attachment, we use it with the values provided in this question.
First, use the discount yield to calculate the price (P) of the bond
Face value = $1,000,000
Discount yield = 2.29 or 0.0229 as a decimal
Discount yield = [ (FV - P)/P ] *(360/T)
0.0229 =[ (1,000,000 -P)/P ] *360/69
0.0229P = (1,000,000 -P )5.2174
0.0229P + 5.2174P = 5,217,391.30
Price; P = $995,628.3618
Next, plug in the numbers in the bond equivalent yield (BEY) formula;
BEY = [ (1,000,000 - 995,628.3618)/$995,628.3618 ] * 365/69
BEY = 0.02323 OR 2.32%
