Answer:
A. $125,000
Explanation:
before tax loss on discontinued operations
= Operating loss Feb. 1, 2016 – Jan. 31, 2017 + Operating loss Feb. 1, 2016 – Jan. 31, 2017
= $115,000 + $10,000
= $125,000
Therefore, Rocket would report a before-tax loss on discontinued operations of $125,000.
Entrepreneurs are people who design, launch and run new businesses that are initially small with an aim of making profit. When entrepreneurs are bringing a new business or a new production method to the market they are innovating. Innovation is the process of implementing new idea or method of production in a business to create or increase value of a organization.
Answer:
The financial advantage of buying 72,000 units from the supplier instead of making those units is that Cane would not its traceable fixed manufacturing overhead.
If we assume that Cane's fixed costs are made up of traceable fixed manufacturing overhead of 60% or $60,000 and 40% of common fixed expenses or $40,000, then $60,000 would not be incurred by Cane in the period it decides to buy from the supplier.
Explanation:
Traceable fixed manufacturing overheads are the expenses that can be traced to production units. We can say that they are variable with production units or that production gives rise to them. This implies that when there is production, such costs are incurred, whereas, they are not when there is no production. They arise due to usage. For example, more utility energy is consumed based on production.
The common fixed expenses are allocated costs, including administrative expenses, for example. By their nature, they are generally unavoidable whether Cane decides to produce or buy from the supplier. And since they must be incurred and allocated, they are not relevant in making a buy or make decision.
Answer:
Operating income increases by $40,000.
Explanation:
Given that,
Total fixed costs = $840,000
Sale price per unit = $60
Variable cost per unit = $30
Additional amount spend on advertising = $35,000
Sales volume would increase by 2,500 units.
Contribution margin:
= Sales - Variable costs
= $60 - $30
= $30 per unit
Increase in operating income:
= Increase in contribution margin - Increase in Fixed costs
= ($30 × 2,500 units) - $35,000
= $75,000 - $35,000
= $40,000