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ioda
3 years ago
14

Tolton, Inc. is just shy of hitting its operating income target. The manager, K.T. Tolton, decides to purchase inferior material

s right before year end. The standard price for the materials is $13.00 per pound. K.T. buys 3,000 pounds of inferior product at $11.37 per pound. What is the effect on net income for the year? Please sign an increase as a positive number (e.g. 100) and a decrease as a negative number (e.g. -100).
Business
1 answer:
mario62 [17]3 years ago
6 0

Answer:

Net income increase - $4,890

Explanation:

The computation of the effect on net income is shown below:

= Number of pounds of inferior product × (standard price for the materials - inferior product price per pound)

= 3,000 pounds × ($13 - $11.37)

= 3,000 pounds × $1.63

= $4,890 increase

For determining the effect we took the difference of the prices and then multiply it with the number of pounds of the inferior product

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