Selling price $215 $230 Direct materials (pounds) 23,000 25,000 Direct materials costs per pound $30 $32 Manufacturing capacity for CM5 (units) 11,000 11,000 Conversion costs (fixed costs) $770,000 $803,000 Conversion costs per unit of capacity $70 $73 Manufacturing conversion costs in each year depend on production capacity defined in terms of CM5 units that can be produced. Required: What is the net effect on operating income as a result of the growth component? $51,000 $116,800 $112,000 $166,000

Selling price $215 $230 Direct materials (pounds) 23,000 25,000 Direct materials costs per pound $30 $32 Manufacturing capacity for CM5 (units) 11,000 11,000 Conversion costs (fixed costs) $770,000 $803,000 Conversion costs per unit of capacity $70 $73 Manufacturing conversion costs in each year depend on production capacity defined in terms of CM5 units that can be produced. Required: What is the net effect on operating income as a result of the growth component? $51,000 $116,800 $112,000 $166,000

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 16MCQ: Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000...

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