Roadrunner Manufacturing Produces Item Q with Variable Manufacturing Costs of $16/unit.The

question 21

Essay

Roadrunner Manufacturing produces Item Q with variable manufacturing costs of $16/unit.The selling price of Item Q is $20/unit.The fixed manufacturing overhead cost is $75,000.A normal production run includes 150,000 units.Roadrunner Manufacturing has discovered an additional process to change Item Q into Item QR.Additional costs are estimated at $3/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 QR?

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Definitions:

Financial Projections

Estimates of future revenue, expenses, and financial performance of a business.

GDP Averages

A statistical measure that represents the average value of the gross domestic product over a specified period, indicating the economic health of a country.

Consumer Demographic

Characteristics of consumers, such as age, gender, income, and education, used for market segmentation.

Business Plan

A detailed document that outlines the objectives, strategies, financial projections, and operational guidelines for a new or existing business.