ACCT 2101 : Acct Final

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azuremammoth471

15 Mar 2019

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35,000: variable costs, variable costs and fixed costs. Adler company manufactures a product with the following costs: The company normally sells 10,000 units at a price of each. Adler has a one-time opportunity to sell an additional 3,000 units at each in a foreign market which would not affect its present sales. Fixed overhead: may company produces 1,000 units of a necessary component with the following costs: May company could avoid ,000 in fixed overhead costs if it acquires the components externally. A company has a process that results in 500 drums of chemical l that can be sold for per drum. L further at a cost of ,000 and then sell it for per drum. The focus of a sell or process further decision: incremental cost, incremental revenue, both incremental revenue and incremental cost, neither incremental revenue nor incremental cost. A company is considering replacing old equipment with new equipment.

Related Questions

	#1	Which of the following correctly describes fixed and variable cost behavior as total volume increases?
	A.	Unit fixed costs stay the same and unit variable costs increase.
	B.	Total fixed costs stay the same and total variable costs increase.
	C.	Unit fixed costs decrease and total variable costs decrease.
	D.	Unit fixed costs decrease and unit variable costs decrease.

	#2	The incremental profit generated by the sale of one additional unit is equal to the
	A.	contribution margin per unit.
	B.	selling price.
	C.	margin of safety.
	D.	incremental cost.

	#3	Clipper Office Furniture uses cost-plus pricing with a 40% mark-up on total cost at capacity. The company is currently selling 40,000 units at $19.60 per unit. Each unit has a variable cost of $9. In addition, the company incurs $200,000 in fixed costs annually. If demand falls to 32,000 units and the company wants to continue to earn a 40% return, what price should the company charge?
	A.	$15.25
	B.	$21.35
	C.	$19.60
	D.	$27.44

	#4	ABC company has $6.50 per unit in variable costs and $2.20 per unit in fixed costs at a volume of 40,000 units. If the company uses cost-plus 20% for pricing, which of the following should the company use to determine the price?
	A.	The company should use a unit cost of $8.70 per unit only at a volume of 40,000 units.
	B.	The company should use a unit cost of $8.70 at any volume level.
	C.	The company should use a unit price of $10.44 at any volume level.
	D.	The company should ignore fixed costs for cost-plus pricing.

	#5	Which of the following is a grouping of overhead costs whose total is allocated using one allocation base?
	A.	Cost objective
	B.	Cost pool
	C.	Direct cost
	D.	Cost driver

	#6	Which one of the following is the preferred alternative when deciding between two options?
	A.	Incremental profit is greater than under the other alternatives.
	B.	Revenues are greater than under the other alternatives.
	C.	Expenses are less than under the other alternatives.
	D.	No opportunity or sunk costs exist.

#7	The required rate of return used to calculate an investmentâs net present value is related to the firmâs
A.	contribution margin.
B.	cost of capital.
C.	total assets.
D.	Price/Earnings ratio.

#8	A company is trying to decide whether to keep or drop the organic foods department in its grocery store. If organic foods are dropped, the manager will be laid off. What is the manager's salary in relation to the decision to keep or drop the department?
A.	A variable cost and therefore relevant
B.	Avoidable and therefore incremental
C.	Sunk and therefore not relevant
D.	A fixed cost and therefore not relevant

#9	The following information relates to Ajax Widgets during the year. There was no beginning inventory.
	Units produced	11,000
	Units sold	10,000
	Units in ending inventory	1,000
	Fixed manufacturing overhead	$220,000
	How much fixed manufacturing overhead will be expensed during the year (included in Cost of Goods Sold) using full costing?
A.	$220,000
B.	$200,000
C.	$20,000
D.	$10,000

#10	If the required rate of return is greater than the internal rate of return of a potential investment, the company should judge the investment as acceptable.
A.	This is a True statement
B.	This is a False statement
C.	Not enough information provided.

#11	The basic concept involved in time value of money calculations is that
A.	it is better to receive a dollar in the future than to receive a dollar today
B.	incremental revenues must exceed incremental costs.
C.	it is better to receive a dollar today than to receive a dollar in the future.
D.	it can only be applied to positive cash flows

#12	Hanson Sports has three product lines: footballs, basketballs, and bats. Common costs are allocated based on relative sales. A product line income statement for the year ended December 31, 2016 follows:
		Footballs	Basketballs	Bats	Total
	Sales	$600,000	$800,000	$400,000	$1,800,000
	Cost of goods sold	260,000	400,000	230,000	890,000
	Gross margin	340,000	400,000	170,000	910,000
	Less other variable costs	85,000	120,000	80,000	285,000
	Contribution margin	255,000	280,000	90,000	625,000
	Less direct salaries	50,000	60,000	45,000	155,000
	Less common fixed costs	85,000	100,000	55,000	240,000
	Net income	$120,000	$120,000	-$10,000	$230,000

	Since the profit for bats is a net loss, the company is considering dropping this product line. What is the incremental $ effect on total net income of dropping the Bats line?


#13	Right Air Supply sells a specialized air filter that has a variable cost of $10 each.
	Fixed costs are estimated to be $700,000 across all levels of sales shown below.
	Units Sold	Unit Price	CM per unit x Qty	Fixed Costs	Profit
	90,000	$33		700,000
	100,000	$31		700,000
	110,000	$30		700,000
	120,000	$28		700,000
	Which price should Right Air Supply charge to maximize profits?


#14	Randolph Corporation sells a single product at a price of $275 per unit. Variable cost per unit is $135 and fixed costs total $356,860. If sales are expected to be $825,000, what is the companyâs margin of safety?


#15	Roger Excavating Company experienced the following costs in 2016:
	Direct materials	$1.75 per unit
	Direct labor	$2.00 per unit
	Variable manufacturing overhead	$2.50 per unit
	Variable selling	$0.75 per unit
	Fixed manufacturing overhead	$50,000
	Fixed selling	$15,000
	Fixed administrative	$5,000
	During 2016, the company manufactured 100,000 units and sold 80,000 units. If the average selling price per unit was $22.65, what is the amount of the companyâs contribution margin per unit?

sapphireeagle929

Cornerstone Exercise 17.1 (Algorithmic) Make-or-Buy Decision, Alternatives, Relevant Costs Each year, Basu Company produces 11,000 units of a component used in microwave ovens. An outside supplier has offered to supply the part for $1.24. The unit cost is: Direct materials $0.76 Direct labor 0.27 Variable overhead 0.09 Fixed overhead 2.75 Total unit cost $3.87 Required: 1. What are the alternatives for Basu Company? 2. Assume that none of the fixed cost is avoidable. List the relevant cost(s) of internal production. List the relevant cost(s) of external purchase. 3. Which alternative is more cost effective and by how much? by $ 4. What if $21,360 of fixed overhead is rental of equipment used only in production of the component that can be avoided if the component is purchased? Which alternative is more cost effective and by how much? by $

amaranthalpaca408

Holtrop Corporation has received a request for a special orderof 9,400 units of product Z74 for $46.90 each. The normal sellingprice of this product is $52.00 each, but the units would need tobe modified slightly for the customer. The normal unit product costof product Z74 is computed as follows:


Directmaterials	$17.70
Direct labor	7.00
Variablemanufacturing overhead	4.20
Fixed manufacturingoverhead	7.10

Unit productcost	$36.00

Direct labor is a variable cost. The special order would have noeffect on the company's total fixed manufacturing overhead costs.The customer would like some modifications made to product Z74 thatwould increase the variable costs by $6.60 per unit and that wouldrequire a one-time investment of $46,400 in special molds thatwould have no salvage value. This special order would have noeffect on the company's other sales. The company has ample sparecapacity for producing the special order.

Required:

Determine the effect on the company's the incremental netoperating income of accepting the special order. (Omit the"$" sign in your response.)

Incremental net operating income

..................................................................................................................................................

Nicklin Corporation is considering two alternatives, code-namedM and N. Costs associated with the alternatives are listedbelow:

	Alternative M		Alternative N
Supplies costs	$	57,000	$	51,000
Power costs	$	32,000	$	32,000
Inspectioncosts	$	12,000	$	18,500
Assembly costs	$	25,000	$	14,000

Required:

a.	Which costs are relevant and which are not relevant in thechoice between these two alternatives?


Supplies costs	(Click toselect)RelevantNot relevant
Power costs	(Click toselect)Not relevantRelevant
Inspectioncosts	(Click toselect)Not relevantRelevant
Assembly costs	(Click toselect)RelevantNot relevant

b.	What is the differential cost between Alternative M andAlternative N? (Enter your answer as a negative amount witha minus sign. Omit the "$" sign in your response.)

Differentialcost

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ACCT 2101 : Acct Final

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