Answer:
Increase in income= $2,965.6
Explanation:
Giving the following information:
Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 23,600 golf discs is:
Materials $ 12,036
Labor 35,400
Variable overhead 23,128
Fixed overhead 47,200
Total $117,764
McGee Corporation offers Gruden $4.91 per disc for 4,930 discs. If Gruden accepts the offer, its fixed overhead will increase from $47,200 to $53,700 due to the purchase of a new imprinting machine.
Total variable cost= (12,036 + 35,400 + 23,128)= 70,564
Unitary variable cost= 70,564/23,600= $2.99
Increase in fixed costs= $6,500
Increase in income= (4930*4.91) - (4930*2.99) - 6500= $2,965.6
Answer:
All the statements are false
Explanation:
A simplified employee pension (SEP) retirement plan can be set up by an employer or by someone that is self-employed. The employer benefits from the SEP because his contributions are tax deductible. The employer's contributions to SEP individual retirement accounts is completely discretionary, they don't have to follow a fixed rate or amount. The contributions must be equally proportional to all full time employees. The main advantage of a SEP plan is that it is very simple to set up.
Answer:
C. Decrease by $7,000
Explanation:
Calculation to determine what company's overall operating income would Decrease by
Using this formula
Overall operating income =(Product X units*Contribution margin )-Fixed overhead eliminated
Let plug in the formula
Overall operating income=(5,000 units*$5)-$18,000
Overall operating income=$25,000-$18,000
Overall operating income=$7,000 Decrease
Therefore As a result of discontinuing Product X, the company's overall operating income would:Decrease by $7,000
Answer:
The answer to both a and b is in the explanation below
Explanation:
a) The increase in wage can either decrease or increase the hours worked. This is became an increase in wage has both substitution effect and income effect that work in different directions. Substitution effect An increase in wage increases the opportunity cost of leisure, thereby making the worker increase number of hours worked. Income effect The increase in wage also makers the worker richer, thereby making the worker decrease number of hours worked.
Since no information about worker's preferences is given, we do not Imow which effect will dominate the other effect and, therefore, we do not know what the net impact of the increase in wage will be.
b) The bonus will only have income effect. The bonus will make the workers richer, thereby making the worker decrease number of hours worked.
If in part a), the substitution effect and income effect are equal in magnitude, then there will be no change in the number of hours worked. The number of hours worked will remain the same at 2000 hours. Since the employer would be paying $5 extra on each hour worked, the cost to the employer of increase in wage would be $10,000 (=2000 x $5), which is the same as the bonus in part b).
