Macadamia Co

question 159

Essay

Macadamia Co.produced and sold 40,000 units last year.Per unit revenue and costs were as follows:

The Fixed Manufacturing Overhead provides a capacity of 50,000 units.The Production Manager has proposed leasing a new machine at a cost of $80,000 per year.This will reduce Direct Labour by 30% and improve quality so the the selling price per unit can be increased by $10.Production and sales are expected to remain the same as last year.
Required:
Prepare a statement of operating income assuming the leasing proposal is accepted.

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Definitions:

Superficial Pectoral

Refers to the muscles located at the front of the chest, involved in the movement of the shoulders and arms.

Sartorius

The longest muscle in the human body, running down the length of the thigh; it helps in flexing, abduction, and lateral rotation of the hip.

Gracilis

A slender muscle in the inner thigh, contributing to the adduction of the hip and flexion of the knee.

Pectineus

A muscle in the upper thigh that helps in hip flexion and adduction, aiding in movements like walking and running.