The Bolger Corporation has the capacity to produce 50,000 straw hats with its present facilities....
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The Bolger Corporation has the capacity to produce 50,000 straw hats with its present facilities. There are no beginning or ending inventories. The following information is available: Total sales $1,200,000, Normal selling price per hat $30, Variable production costs per hat $13, Avoidable fixed manufacturing overhead $28,000, Unavoidable fixed manufacturing overhead, $100,000 Unavoidable fixed selling & administrative costs $56,000. Lahr Company wants to buy 10,000 straw hats but cannot spend more than $15 per hat. Should Bolger sell the hats to Lahr Company for $15 per hat? No, the offered price is half the normal selling price and Bolger Corp. would lose $26,000 operating income. Yes, Bolger Corp's operating income will increase by $20,000 total. Yes, Bolger Corp's operating income will increase by $13,000 total. margin on each hat sold
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