20110 (2 complete) HW Score Score: 0 of 1 pt T125-2 (similar to) Jones Company m

Question

20110 (2 complete) HW Score Score: 0 of 1 pt T125-2 (similar to) Jones Company makes a product that regularly sells for $14.00 per unt (Cick the icon to view additional informaton ) 7. If Jones Company has excess capacity, should it accept the offer from Harcourt? Show your calculations 8. Does your answer change if Jones Company is operating at capacity? Why or why not? 7. Ir Jones Company has excess capacity, should it accept the offer from Harcourt? Show your calculations. (Use a minus sign or parentheses to show a decrease in operating incoms Expected increase in revenue Expected increase in variable manufacturing costs Expected increase/ decrease) in operating income More Info The product has variable manufacturing costs of $9.50 per unit and fixed manufacturing costs of $2 50 per unit (based on $210,000 total fixed costs at current production of 150,000 units) Therefore, total production cost is $12.00 per unilt. Jones Company receives an ofer from Harcourt Company to purchase 4,500 units for $8.50 each. Selling and administrative costs and future sales will not be affected by the sale, and Jones does not expect any additional fixed costs Print Done

Explanation / Answer

7 Expected increase in revenue 38250 (4500*8.5) Expected increase in variable manufacturing cost 42750 (4500*9.5) Expected increase(decrease) in operating income -4500 8 No

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