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The managers at Falcon Industries are considering implementing a new production technique. They have the following data at their disposal:
Before implementing
new technique
(Estimates)
After implementing
new technique
(Estimates)
Revenues
$500,000
$550,000
Direct materials
50,000
42,500
Manufacturing labor
62,500
62,500
Manufacturing overhead
67,500
50,000
Marketing
27,500
40,000
Operating income
292,500
355,000
Falcon has already paid $2,500 to Brown & Associates to carry out initial feasibility study. Implementing new technique will also lead to annual payments of $7,500 towards royalties. Which of the following statements is true of Falcon Industries?
Before implementing
new technique
(Estimates)
After implementing
new technique
(Estimates)
Revenues
$500,000
$550,000
Direct materials
50,000
42,500
Manufacturing labor
62,500
62,500
Manufacturing overhead
67,500
50,000
Marketing
27,500
40,000
Operating income
292,500
355,000
Falcon has already paid $2,500 to Brown & Associates to carry out initial feasibility study. Implementing new technique will also lead to annual payments of $7,500 towards royalties. Which of the following statements is true of Falcon Industries?
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