StoniBrook Industries produces decorative hardware used by home construction firms and sold in do-it-yourself retail outlets....
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StoniBrook Industries produces decorative hardware used by home construction firms and sold in do-it-yourself retail outlets. The business is highly competitive with little opportunity for raising prices. StoniBrook's master budget for the next fiscal year is shown below. Sales $8,400,000 Cost of goods sold* Advertising Sales salaries 6,000,000 500,000 400,000 Sales commissions 168,000 Administrative expenses Operating income 350.000 $ 982.000 *50% direct material, 30% direct labor, 20% fixed overhead The following events could impact the budget. • Renegotiation of a union contract resulting in a 3.5% wage increase for factory workers. • A 5% increase in the cost of 20% of its material. • Elimination of sales commissions with an equal increase in sales salaries. If all of these events occur, the incremental change in StoniBrook's operating income will be a. $123,000 decrease. b. $93,000 decrease. c. $45,000 increase. d. $75,000 increase. StoniBrook Industries produces decorative hardware used by home construction firms and sold in do-it-yourself retail outlets. The business is highly competitive with little opportunity for raising prices. StoniBrook's master budget for the next fiscal year is shown below. Sales $8,400,000 Cost of goods sold* Advertising Sales salaries 6,000,000 500,000 400,000 Sales commissions 168,000 Administrative expenses Operating income 350.000 $ 982.000 *50% direct material, 30% direct labor, 20% fixed overhead The following events could impact the budget. • Renegotiation of a union contract resulting in a 3.5% wage increase for factory workers. • A 5% increase in the cost of 20% of its material. • Elimination of sales commissions with an equal increase in sales salaries. If all of these events occur, the incremental change in StoniBrook's operating income will be a. $123,000 decrease. b. $93,000 decrease. c. $45,000 increase. d. $75,000 increase.
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Related Book For
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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