Macadamia Co

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.