The officers of Bradshaw Company are reviewing the profitability of the companys four products and the potential
Question:
The officers of Bradshaw Company are reviewing the profitability of the company’s four products and the potential effects of several proposals for varying the product mix. An excerpt from the income statement and other data follow:
Totals | Product P | Product Q | Product R | Product S | ||||||||||
Revenues | $62,600 | $10,000 | $18,000 | $12,600 | $22,000 | |||||||||
Cost of goods sold | 44,274 | 4,750 | 7,056 | 13,968 | 18,500 | |||||||||
Gross profit | $18,326 | $ 5,250 | $10,944 | $ (1,368) | $ 3,500 | |||||||||
Operating expenses | 12,012 | 1,990 | 2,976 | 2,826 | 4,220 | |||||||||
Income before income taxes | $ 6,314 | $ 3,260 | $ 7,968 | $ (4,194) | $ (720) | |||||||||
Units sold | 1,000 | 1,200 | 1,800 | 2,000 | ||||||||||
Sales price per unit | $10.00 | $15.00 | $7.00 | $11.00 | ||||||||||
Variable cost of goods sold per unit | 2.50 | 3.00 | 6.50 | 6.00 | ||||||||||
Variable operating expenses per unit | 1.17 | 1.25 | 1.00 | 1.20 |
Production of P can be doubled by adding a second shift, but higher wages must be paid, increasing the variable cost of goods sold to $3.50 for each additional unit. If the 1,000 additional units of P can be sold at $10 each, the total effect on income before income taxes will be __________?
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil