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Ironwood
You have been asked to assist the management of Ironwood
You have been asked to assist the management of Ironwood Corporation in arriving at certain
decisions. Ironwood has its home office in Michigan and leases factory buildings in Wisconsin,
Minnesota, and North Dakota, all of which produce the same product. Ironwood’s management
provided you a projection of operations for next year as follows:
Required
To assist the management of Ironwood Corporation, prepare a schedule computing Ironwood’s
estimated operating profit from each of the following options:
a. Expansion of the Minnesota factory.
b. Negotiation of long-term contract on a royalty basis.
c. Shutdown of North Dakota operations with no expansion at other locations.
(CPAadapted)
ANSWER