1. Kilihea Corporation produces a single product. The company\'s absorption cost
ID: 2357431 • Letter: 1
Question
1. Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows: Kilihea Corporation Income Statement For the month ended July 31 Sales (18,100 units) $814,500 Cost of goods sold 552,050 Gross margin 262,450 Selling and administrative expenses: Fixed 126,700 Variable 90,500 Total selling and administrative expense 217,200 Net operating income $ 45,250 The company's variable production costs are $22.50 per unit and its fixed manufacturing overhead totals $153,300 per month. The break-even point in units for the month under variable costing is (Round your intermediate calculations and final answer to nearest whole number): 13,150 units 12,350 units 16,000 units 14,250 units 2. Eagle Corporation manufactures a picnic table. Shown below is Eagle's cost structure: Variable cost per table Total fixed cost for the year Manufacturing cost $88 $255,300 Selling and administrative $6 $36,630 In its first year of operations, Eagle produced and sold 11,100 tables. The tables sold for $132 each. How would Eagle's variable costing net operating income be affected in its first year if only 9,680 tables were sold instead of 11,100? net operating income would have been $78,810 lower net operating income would have been $53,960 lower net operating income would have been $29,820 lower net operating income would have been $59,960 lower 3. Pong Incorporated's income statement for the most recent month is given below. Total Store G Store H Sales $160,000 $66,900 $93,100 Variable expenses 54,835 28,767 26,068 ________________________________________ ________________________________________ ________________________________________ Contribution margin 105,165 38,133 67,032 Traceable fixed expenses 71,700 19,800 51,900 ________________________________________ ________________________________________ ________________________________________ Segment margin 33,465 $18,333 $15,132 Common fixed expenses 20,600 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ Net operating income $ 12,865 ________________________________________________________________________________ The marketing department believes that a promotional campaign for Store H costing $10,800 will increase the store's sales by $17,800. If the campaign is adopted, overall company net operating income should: decrease by $4,984 decrease by $5,482 increase by $2,016 increase by $7,000Explanation / Answer
increase by $2,016
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