Heinz Manufacturing Produces Item Q with Variable Manufacturing Costs of $12/unit

question 118

Essay

Heinz Manufacturing produces Item Q with variable manufacturing costs of $12/unit. The selling price of Item Q is $15/unit. The fixed manufacturing overhead cost is $72,000. A normal production run includes 100,000 units. Heinz Manufacturing has discovered an additional process to change Item Q into Item QR. Additional costs are estimated at $7/unit. Item QR would sell for $24/unit. Additional fixed manufacturing overhead costs of $4,500 would be incurred if Item QR is produced. There would be no change in the number of units produced.
What would be the operating income for Item Q?

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Definitions:

Psychopharmacology

Study of how drugs affect the nervous system and behavior.

Neurochemicals

Chemicals that facilitate communication between neurons in the nervous system, including neurotransmitters and neuromodulators.

Blood-Brain Barrier

A selective barrier that prevents certain substances in the blood from entering the brain, protecting it from potentially harmful chemicals while allowing essential nutrients to pass through.

Neuropsychological Illness

Disorders that arise from changes in the functioning of the brain, affecting cognitive, emotional, and behavioral functioning.