1. 1. Markson Company had the following results of operations for the past year:
2. Contribution margin income statement 
3. 
   
4.                                                    Per Unit           Annual
5. 
   
6.  Total Sales (8,800 units)          $ 20.00          $ 176,000
7. 
   
8. Variable costs 
9. 
   
10. Direct materials                          4.253                  7,400
11. 
    
12. Direct labor                                   6.005                  2,800
13. 
    
14. Overhead                                       2.001                   7,600
15. 
    
16. Contribution margin                    7.756                   8,200
17. 
    
18. Fixed costs 
19. 
    
20. Fixed overhead                            4.253                     7,400
21. 
    
22. Income$                                         3.50                      $ 30,800
23. 
    A foreign company offers to buy 2,400 units at $14 per unit. In addition to variable manufacturingand administrative costs, selling these units would increase fixed overhead by $1,920 for the purchase of special tools. Markson's annual productive capacity is 13,200 units. If Markson accepts this additional business, its profits will:

2. Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $55,000 for the past year as shown below.

Segment Income (Loss)

Sales$ 1,080,000

Variable costs 805,000

Contribution margin275,000

Fixed costs330,000

Income (loss)$ (55,000)

If the kitchen division is dropped, all $805,000 of its variable costs are avoidable, and $198,000 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be:

3. Valber Company is considering eliminating its Phone division. The company allocates fixed costs based on sales. If the Phone division is dropped, all of its variable costs are avoidable, and $151,000 of its fixed costs are avoidable.

                              Desktops        Laptops          Tablets           Phones

Sales$                   359,000$          874,500$        697,000       $ 976,000

Variable costs      202,000             636,000         529,000          796,000

Contribution margin157,000       238,500          168,000         180,000

Fixed costs             72,200              175,300         139,800          196,000

Net income (loss)  84,800               63,200            28,200          (16,000)

The impact on Valber's income from eliminating the Phone division is:

Answer rating: 100% (QA)

1 If Markson Company accepts the foreign companys offer to buy 2400 units at 14 per unit ... View the full answer