asy Fit Ltd$.$ manufactures heating, ventilation, and air conditioning $($HVAC$)$ equipment. The Manufacturing Division creates parts, and the Assembly Division builds and sells the equipment. The Manufacturing Division $$sells$$ furnace parts packages to the Assembly Division. The market price for the Assembly Division to purchase a mini furnace is $$3,500.$ The fixed costs for the Manufacturing Division are assumed to be the same over the range of $2,000-5,000$ units. The fixed costs for the Assembly Division are assumed to be $$40\mathrm{.}00$ per unit at $5,000$ units.

Manufacturing Division costs per furnace:

Direct materials $$1,300\mathrm{.}00$

Direct labour $$350\mathrm{.}00$

Variable overhead $$100\mathrm{.}00$

Division fixed costs $$90\mathrm{.}00$

Assembly Division costs per completed furnace:

Direct materials $$25\mathrm{.}00$

Direct labour $$150\mathrm{.}00$

Variable overhead $$50\mathrm{.}00$

Division fixed costs $$40\mathrm{.}00$

If the Assembly Division sells $1,000$ furnaces at a price of $$3,500$ per unit to customers, what is the company$$s operating income?

Answer rating: 100% (QA)

The operating income for the company can be calculated by determining the total revenue and subtract... View the full answer