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

question 93

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.
By what percent would Heinz Manufacturing's operating income improve if the change is made?

---

Definitions:

Dangerous Procedure

A medical or operational task that carries a high risk of harm to persons or property.

Written Consent

A formal agreement documented in writing whereby a party explicitly states their approval or permission for certain actions.

Written Consent

Formal permission given in writing for an action or decision, often required legally or institutionally.

Emergency Treatment

Medical care administered for acute conditions or injuries requiring immediate attention.