Franklin, Inc. has two divisions, Seward and Charles. Following is the income statement for the previous...

 

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Franklin, Inc. has two divisions, Seward and Charles. Following is the income statement for the previous year: Seward Charles $907,800 $605,200 559,580 514,420 $348,220 $ 90,780 156,700 $191,520 Sales Variable Costs Contribution Margin Fixed Costs Profit Margin 156,700 $(65,920) Of the total fixed costs, $310,000 are common fixed costs that are allocated equally between the divisions. What would Franklin's profit margin be if Charles were dropped? Clifford, Inc. currently manufactures 1,600 subcomponents in one of its factories. The current unit costs to produce the subcomponents are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Per unit $ 47 59 55 133 $294 Due to a labor strike, Clifford is considering purchasing the subcomponents from an outside supplier for $390 per unit rather than paying the 10% increase in direct labor costs demanded by the union. Fixed overhead is not avoidable. If Clifford purchases the subcomponent from the outside supplier, how much will profit differ from what it would be if it manufactured the subcomponents with the increase in direct labor cost? (Do not round intermediate calculations.) Franklin, Inc. has two divisions, Seward and Charles. Following is the income statement for the previous year: Seward Charles $907,800 $605,200 559,580 514,420 $348,220 $ 90,780 156,700 $191,520 Sales Variable Costs Contribution Margin Fixed Costs Profit Margin 156,700 $(65,920) Of the total fixed costs, $310,000 are common fixed costs that are allocated equally between the divisions. What would Franklin's profit margin be if Charles were dropped? Clifford, Inc. currently manufactures 1,600 subcomponents in one of its factories. The current unit costs to produce the subcomponents are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Per unit $ 47 59 55 133 $294 Due to a labor strike, Clifford is considering purchasing the subcomponents from an outside supplier for $390 per unit rather than paying the 10% increase in direct labor costs demanded by the union. Fixed overhead is not avoidable. If Clifford purchases the subcomponent from the outside supplier, how much will profit differ from what it would be if it manufactured the subcomponents with the increase in direct labor cost? (Do not round intermediate calculations.)

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1 Calculate Franklin Incs profit margin if the Charles division were dropped It is needed to conside... View the full answer