Tolton, inc. is just shy of hitting its operating income target. the manager, k. t. tolton, decides to purchase inferior materials right before year end. the standard price for the materials is $13.00 per pound. k. t. buys 3,000 pounds of inferior product at $11.37 per pound. what is the effect on net income for the year? sign an increase as a positive number (e. g. 100) and a decrease as a negative number (e. g. -100).

Net income increase - $4,890

Explanation:

The computation of the effect on net income is shown below:

= Number of pounds of inferior product × (standard price for the materials - inferior product price per pound)

= 3,000 pounds × ($13 - $11.37)

= 3,000 pounds × $1.63

= $4,890 increase

For determining the effect we took the difference of the prices and then multiply it with the number of pounds of the inferior product

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