Seed Food, Inc. expects to sell 20,000 bags of flaxseed at a price of $20 per...

Seed Food, Inc. expects to sell 20,000 bags of flaxseed at a price of $20 per bag per year. Direct materials equal $10 per bag, direct labor equals $5 per bag and allocated overhead is fixed and will equal $60,000 per year. Seed Food is considering buying a bagging machine to reduce the time spent filling the bags manually. The depreciation of the machine will increase overhead by $10,000 per year, but the direct labor cost per bag is expected to decrease by $2. What would be the change in operating income if it bought the machine?

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ekkarill92 answered 1 year ago

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