50.1K

Verified Solution

Link Copied!

Omega sell for $250 and Epsilon for $140, variable manufacturing cost for omega $100 and for epsilon is $70. Produces and sells 8500 Omegas and 7000 Epsilons per year.

6 Coase Company manufactures tw products called Omega and Ipsilon that set for $215 and 40pcie The company has the capacity to annuatly peoduce 10,000 units of eac product It unit onts for eacs ouct thus capacty level of activity are gives below ome Variable manufacturing sost Traceabie fixed manufactaring overhead Variable selling expenses Common fixed expenses Total cost per unit s100 31. s19 $152 The company considers its traceable fixed manufacturing ov erthcad to be avoid.ble. whercas its common ised expenses are deemed unavoidable and have been allocated to preducts bused on sales dollars Suppose Coase normally produces and sells 8,500 Omegas and 7000 Epsilons per year If Cease discontinucs th Epsilon product line, its sales representatives could increase sales of Omega by 1,400 nits. What is the financial advantage (disadvantage) of discontinuing the Epsilon product line? A. Coase's net operating income will decrease by $ 119.800 B. Coase's net operating income will decicase by S 200200 C Coase's net operating income will ncrease hy S 119,80o D. Coase's net operating income will inrease by S E None of the above 200.200

Answer & Explanation Solved by verified expert

See Answer