Rogers Company makes a product that regularly sells for $ per unit.
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If Rogers Company has excess capacity, should it accept the offer from Holden? Show your calculations.
Does your answer change if Rogers Company is operating at capacity? Why or why not?
If Rogers Company has excess capacity, should it accept the offer from Holden? Show your calculations. Use a minus sign or parentheses to show a decrease in operating income.
Expected increase in revenue
Expected increase in variable manufacturing costs
Expected increasedecrease in operating income
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The product has variable manufacturing costs of $ per unit and fixed manufacturing costs of $ per unit based on $ total fixed costs at current production of units Therefore, total production cost is $ per unit. Rogers Company receives an offer from Holden Company to purchase units for $ each. Selling and administrative costs and future sales will not be affected by the sale, and Rogers does not expect any additional fixed costs.
