All of the questions on the last part of the PDF- Decision Making Skill Drill. I am very stuck- any help would be much appreciated!!! Document Preview: . 0 OMEGA WIDGET MANUFACTURERS Omega Widget Manufacturers has variable costs (of making 10,000 widgets) that equals $20 per widget. Total fixed costs for Omega equal $100,000. Currently the sales price is $32 per widget (Next years anticipated sales = 10,000 uillts) During the budgeting process, Manager Abel recommends continuing production at 10,000 uruts-Manager Belzos recommends manufacturing 12,500 units. Supervisor Wylie, who is the production line supervisor, and up for a promotion to manager of Omegas Lanai, Hawaii factory, and also gets a bonus equal to 5% of the product lines net income just demands? the production amount be 16,000 uillts-(There is enough productive capacity to make 16,000 uillts.) Omega has no selling expenses or general expenses.) INSTRUCTIONS: 0 1. Make out a regular financial accounting income statement pretending each proposal were used. 2. Make comments on the results and how they compare-3-Make out variable costing income statements fOf a!I 3 proposals. Bonita Corporation has suggested they wiIl buy 3,000 widgets but are only .willingto pay $25 per unit. Omega has the capacity to fiIIthe order. Fixed costs will stay the same. Can you solve this without doing income statements? (Hint: use contribution margin.) G!I 0 SNAP GUM CO. CHOCOLATE-MINT BUBBLE GUM GREEN APPLE BUBBLE GUM EGG NOG BUBBLE GUM FIXED COSTS* REVENUE $200,000 VARIABLE COSTS 50,000 200,000 *The Snap Gum Companys total fixed overhead consists of $600,000, which for analysis purposes is simply allocated equally to all gum product lines. 7 ! INSTRUCTIONS: 1. Find the Net Income for each gum line. CHOCOLATE-MINT BUBBLE GUM ~REEN APPLE -BUBBLE GUM EGG NOG BUBBLE GUM REVENUE $ $ -VARIABLE COSTS CONTRIBUTION MARGIN -FIXED COSTS NET INCOME ..$ $ $ $ 2. Based upon the financial accountings absorption costing used to make the product~line income statements in instruction 1 . above, make a decision about which product lines to keep using financial accounting ideas only. Attachments: Break-Even-Pr.pdf
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