Practice Exam 8-16 ACC
$2.10 per unit
A cement manufacturer has supplied the following data: Tons of cement produced and sold 264,000 Sales revenue $ 1,082,400 Variable manufacturing expense $ 433,000 Fixed manufacturing expense $ 230,000 Variable selling and administrative expense $ 95,000 Fixed selling and administrative expense $ 220,000 Net operating income $ 104,400 What is the company's unit contribution margin? $2.00 per unit $0.12 per unit $4.10 per unit $2.10 per unit
59.0% Sales- Variable ex CM ratio = CM / sales
A cement manufacturer has supplied the following data: Tons of cement produced and sold: 290,000 Sales revenue: $ 994,000 Variable manufacturing expense: $ 235,000 Fixed manufacturing expense: $ 322,000 Variable selling and administrative expense: $ 172,540 Fixed selling and administrative expense: $ 96,000 Net operating income: $ 168,460 The company's contribution margin ratio is closest to: 44.0% 59.0% 67.6% 16.9%
$27,280
A customer has requested that Lewelling Corporation fill a special order for 2,700 units of product S47 for $32 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $22.00: Direct materials$ 6.30Direct labor4.00Variable manufacturing overhead3.40Fixed manufacturing overhead8.30Unit product cost$ 22.00 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $1.90 per unit and that would require an investment of $17,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: $27,280 ($16,700) $17,200 ($2,500)
one several products produced from a common input
A joint product is: any product which consists of several parts. any product produced by a company with more than one product line. any product involved in a make or buy decision. one of several products produced from a common input.
The incremental costs associated with the order
Accepting a special order will improve overall net operating income if the revenue from the special order exceeds: the contribution margin on the order. the incremental costs associated with the order. the variable costs associated with the order. the sunk costs associated with the order.
4.00
Alpha Corporation reported the following data for its most recent year: sales, $580,000; variable expenses, $380,000; and fixed expenses, $150,000. The company's degree of operating leverage is closest to: 12.00 3.00 4.00 2.90
6.00 degree of operating leverage = contribution margin / net operating income
Alpha Corporation reported the following data for its most recent year: sales, $620,000; variable expenses, $248,000; and fixed expenses, $310,000. The company's degree of operating leverage is closest to: 10.00 1.00 6.00 1.70
$6000 increase
Azuki Corporation operates in two sales territories, Urban and Rural. Data concerning last year's operations appear below: Urban RuralSales $ 320,000 $ 80,000 Variable expenses 208,000 56,000 Contribution margin 112,000 24,000 Traceable fixed expenses 48,000 30,000 Segment margin $ 64,000 $ (6,000) Azuki's common fixed expenses were $25,000 last year. If operations in the Rural Sales Territory would have been discontinued at the beginning of last year, how would this have changed the net operating income of Azuki Corporation as a whole? $5,000 increase $6,000 increase $11,000 increase $24,000 decrease
YI, VP, WX
Banfield Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below: VPYIWX Selling price per unit $ 248.04 $ 230.66 $ 505.44 Variable cost per unit $ 190.71 $ 172.14 $ 388.80 Centiliters of compound W 3.90 3.80 8.10 Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. WX, VP, YI YI, VP, WX WX, YI, VP VP, WX, YI
$8000
Nocum Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units)$ 120,000Variable expenses90,000Contribution margin30,000Fixed expenses21,000Net operating income$ 9,000 If sales volumes decline to 2,900 units, the net operating income would be closest to: $29,000 $1,000 $8,700 $8,000
10,400 units
Nussbaum Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (9,000 units) $ 180,000 Variable expenses 117,000 Contribution margin 63,000 Fixed expenses 56,700 Net operating income $ 6,300 The number of units that must be sold to achieve a target profit of $16,100 is closest to: 32,000 units 19,400 units 10,400 units 23,000 units
162000
Nussbaum Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (9,000 units) $ 180,000 Variable expenses 117,000 Contribution margin 63,000 Fixed expenses 56,700 Net operating income $ 6,300 The break-even point in dollar sales is closest to: $162,000 $117,000 $0Incorrect $173,700
$(24,200)
Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below: Alternative A Alternative B Materials costs $ 43,000 $ 59,700 Processing costs $ 39,700 $ 39,700 Equipment rental $ 13,900 $ 13,900 Occupancy costs $ 16,000 $ 23,500 What is the financial advantage (disadvantage) of Alternative B over Alternative A? $112,600 $(24,200)Correct $136,800 $(124,700)
$49,140
Sorin Incorporated, a company that produces and sells a single product, has provided its contribution format income statement for January. Sales (4,800 units) $ 100,800 Variable expenses 55,440 Contribution margin 45,360 Fixed expenses 34,500 Net operating income $ 10,860 If the company sells 5,200 units, its total contribution margin should be closest to: $45,360 $49,140 $68,500 $11,765
60% Variable expenses / sales
Stauffer Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (8,000 units)$ 320,000Variable expenses192,000Contribution margin128,000Fixed expenses118,400Net operating income$ 9,600 The variable expense ratio is closest to: Multiple Choice 60% 40% 67% 33%
($2)
Stinehelfer Beet Processors, Incorporated, processes sugar beets in batches. A batch of sugar beets costs $42 to buy from farmers and $16 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $18 or processed further for $10 to make the end product industrial fiber that is sold for $30. The beet juice can be sold as is for $38 or processed further for $40 to make the end product refined sugar that is sold for $76. What is the financial advantage (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is? ($25) $60 ($2) $14
$16,000
Stockmaster Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (8,000 units) $ 320,000 Variable expenses 192,000 Contribution margin 128,000 Fixed expenses 121,600 Net operating income $ 6,400 The margin of safety in dollars is closest to: $6,400 $16,000 $121,600 $128,000
$324,000
WV Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $138,000 annually and one salaried estimator who is paid $74,000 annually. The corporate office has two office administrative assistants who are paid salaries of $78,000 and $51,000 annually. The president's salary is $195,000. How much of these salaries are common fixed expenses? $195,000 $324,000 $129,000 $448,000
$200.00
Warrix Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units) $ 120,000Variable expenses90,000Contribution margin30,000Fixed expenses27,000Net operating income$ 3,000 If sales volumes increase to 3,020 units, the increase in net operating income would be closest to: $800.00 $20.00 $600.00 $200.00
sunk costs
Which of the following costs are always irrelevant in decision making? avoidable costs sunk costs opportunity costs fixed costs
Both statements are true
Which of the following statements is true? 1. Eliminating nonproductive processing time is particularly important in a bottleneck operation. 2. Payment of overtime to a worker in order to relax a production constraint could increase the profits of a company.
Neither statement is true
Which of the following statements is true? 1. Segmented statements for internal use should not be prepared using the contribution format. 2. When using segmented income statements, the dollar sales for a company to break even equals the traceable fixed expenses divided by the overall CM ratio.
Only Statement 1 is true
Which of the following statements is true? 1. The margin of safety is the amount by which sales can decrease before losses are incurred by the company. 2. The margin of safety percentage is equal to the margin of safety in dollars divided by total contribution margin.
6,578
Caneer Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $ 240.00 Variable expense per unit $ 81.60 Fixed expense per month $ 997,920 The unit sales to attain the company's monthly target profit of $44,000 is closest to: 7,896 12,769 6,578 4,341
All the statements are true
Which of the following statements is true? 1. When a company is involved in more than one activity in the entire value chain, it is vertically integrated. 2. A vertically integrated company is less dependent on its suppliers than a company that is not vertically integrated. 3. A disadvantage of vertical integration is that by pooling demand for parts from a number of companies, a supplier may be able to enjoy economies of scale that result in higher quality and lower cost than if every company makes its own parts.
Neither statement is true
Which of the following statements is true? A. Future costs that do differ among the alternatives are not relevant in a decision. B. Sunk costs are costs that have proven to be unproductive. Only statement Ione is true. Only statement II is true. Both statements are true. Neither statement is true.
$86,700
Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product. Sales (5,000 units): $ 150,000 Variable expenses: 65,000 Contribution margin: 85,000 Fixed expenses: 46,000 Net operating income: $ 39,000 If the company sells 5,100 units, its total contribution margin should be closest to: $39,780 $85,000 $86,700 $88,000
$310,390
Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: Total CompanyBlue DivisionGold DivisionSales $ 522,000 $ 391,000 $ 131,000 Variable expenses 160,670 89,930 70,740 Contribution margin 361,330 301,070 60,260 Traceable fixed expenses 286,000 239,000 47,000 Segment margin 75,330 $ 62,070 $ 13,260 Common fixed expenses 73,080 Net operating income $ 2,250 The Blue Division's break-even sales is closest to: $518,750 $405,299 $381,481 $310,390
$102,174
Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: Total CompanyBlue DivisionGold DivisionSales$ 522,000$ 391,000$ 131,000Variable expenses160,67089,93070,740Contribution margin361,330301,07060,260Traceable fixed expenses286,000239,00047,000Segment margin75,330$ 62,070$ 13,260Common fixed expenses73,080 Net operating income$ 2,250 The Gold Division's break-even sales is closest to: $102,174 $261,043 $142,043 $518,750
$(73,080)
Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: Total CompanyBlue DivisionGold DivisionSales$ 522,000$ 391,000$ 131,000Variable expenses160,67089,93070,740Contribution margin361,330301,07060,260Traceable fixed expenses286,000239,00047,000Segment margin75,330$ 62,070$ 13,260Common fixed expenses73,080 Net operating income$ 2,250 What is the company's overall net operating income if it operates at the break-even points for its two divisions? $2,250 $0 $(73,080) $(359,080)
$12.40 per minute
Bertucci Corporation makes three products that use the current constraint which is a particular type of machine. Data concerning those products appear below: Selling price per unit $ 494.40 $ 449.43 $ 469.68 Variable cost per unit $ 395.20 $ 320.21 $ 373.92 Minutes on the constraint 8.00 7.10 7.60 Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? $12.40 per minute $18.20 per minute $129.22 per unit $95.76 per unit
GL,NG,TC
Bertucci Corporation makes three products that use the current constraint which is a particular type of machine. Data concerning those products appear below: TCGLNGS elling price per unit $ 494.40 $ 449.43 $ 469.68 Variable cost per unit $ 395.20 $ 320.21 $ 373.92 Minutes on the constraint 8.00 7.10 7.60 Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. TC, NG, GL GL, NG, TC GL, TC, NG TC, GL, NG
$18 per batch
Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $44 to buy from farmers and $30 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $14 or processed further for $51 to make the end product industrial fiber that is sold for $99. The beet juice can be sold as is for $62 or processed further for $55 to make the end product refined sugar that is sold for $99. What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar rather than not processing that batch at all? ($180) per batch ($4) per batchIncorrect $18 per batchCorrect $28 per batch
$1 per batch
Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $53 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79. What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar rather than not processing that batch at all? $15 per batch ($14) per batch ($117) per batch $1 per batch
C
Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $53 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79. Which of the intermediate products should be processed further? A. beet fiber should be processed into industrial fiber; beet juice should be processed into refined sugar B. beet fiber should NOT be processed into industrial fiber ; beet juice should NOT be processed into refined sugar C. beet fiber should NOT be processed into industrial fiber ;beet juice should be processed into refined sugar D. beet fiber should be processed into industrial fiber ;beet juice should NOT be processed into refined sugar
Unit variable expenses is constant
Break-even analysis assumes that: Total revenue is constant. Unit variable expense is constant. Unit fixed expense is constant. Selling prices must fall in order to generate more revenue.
65400
Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Direct materials$ 14.60$ 10.50$ 11.30$ 10.90Direct labor19.7027.7033.9040.70Variable manufacturing overhead4.603.002.903.50Fixed manufacturing overhead26.8035.1026.9037.50Unit product cost$ 65.70$ 76.30$ 75.00$ 92.60 Additional data concerning these products are listed below. Grinding minutes per unit 4.10 5.60 4.60 3.70 Selling price per unit $ 76.40 $ 93.80 $ 87.70 $ 104.50 Variable selling cost per unit $ 2.50 $ 1.50 $ 3.60 $ 1.90 Monthly demand in units 4,300 4,300 3,300 2,300 The grinding machines are potentially the constraint in the production facility. A total of 53,900 minutes are available per month on these machines. Direct labor is a variable cost in this company. How many minutes of grinding machine time would be required to satisfy demand for all four products? 65,400 53,900 47,770 15,280
9800
Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Products ABCD Direct materials $ 19.90 $ 15.20 $ 20.80 $ 23.20 Direct labor1 2.20 8.70 10.50 7.40 Variable manufacturing overhead 1.60 2.10 2.00 2.10 Fixed manufacturing overhead 10.80 11.90 8.80 10.70 Unit product cost $ 44.50 $ 37.90 $ 42.10 $ 43.40 Additional data concerning these products are listed below. ProductsABCD Grinding minutes per unit1. 200.700. 600.60 Selling price per unit $ 59.30 $ 51.70 $ 59.50 $ 55.60 Variable selling cost per unit $ 3.60 $ 1.50 $ 2.20 $ 3.60 Monthly demand in units 4,000 2,000 4,000 2,000 The grinding machines are potentially the constraint in the production facility. A total of 9,000 minutes are available per month on these machines. Direct labor is a variable cost in this company. How many minutes of grinding machine time would be required to satisfy demand for all four products? 10,800 9,800 10,500 12,000
increase of $6000
Chovanec Corporation produces and sells a single product. Data concerning that product appear below: Per UnitPercent of SalesSelling price $ 170 100% Variable expenses 68 40% Contribution margin $ 102 60% Fixed expenses are $521,000 per month. The company is currently selling 7,000 units per month. Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change? decrease of $48,000 decrease of $6,000 increase of $48,000 increase of $6,000
decrease of $8,900
Cobble Corporation produces and sells a single product. Data concerning that product appear below: Per UnitPercent of SalesSelling price $ 160 100% Variable expenses 48 30% Contribution margin $ 112 70% Fixed expenses are $499,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change? increase of $56,100 decrease of $8,900 increase of $99,300 decrease of $56,100
$180,783
Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: AlphaBeta Sales $ 217,000 $ 277,200 Variable expenses $ 117,180 $ 170,900 Traceable fixed expenses $83,160 $ 117,700 The company's common fixed expenses total $91,300. The break-even in sales dollars for Alpha Division is closest to: $379,261 $180,783 $125,700 $198,478
$143,478
Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: AlphaBetaSales $ 190,000 $ 315,000 Variable expenses $ 58,900 $ 151,200 Traceable fixed expenses $ 99,000 $ 107,000 The company's common fixed expenses total $80,800. The break-even in sales dollars for Alpha Division is closest to: $491,129 $143,478 $187,536 $260,580
$191,681
Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: AlphaBetaSales $ 163,000 $ 270,900 Variable expenses $ 86,390 $ 179,900 Traceable fixed expenses $ 90,090 $ 91,000 The company's common fixed expenses total $67,100. The break-even in sales dollars for Alpha Division is closest to: $334,447 $191,681 $95,900 $142,766
31,400
Cranston Corporation makes four products in a single facility. Data concerning these products appear below: ProductsABCDSelling price per unit $ 42.30 $ 50.00 $ 37.60 $ 33.50 Variable manufacturing cost per unit $ 20.80 $ 30.70 $ 21.00 $ 19.90 Variable selling cost per unit $ 2.70 $ 2.10 $ 1.00 $ 2.40 Milling machine minutes per unit 3.30 4.10 2.60 1.30 Monthly demand in units 1,000 4,000 3,000 3,000 The milling machines are potentially the constraint in the production facility. A total of 28,200 minutes are available per month on these machines. How many minutes of milling machine time would be required to satisfy demand for all four products? 11,000 28,200 23,500 31,400
$4.20
Cranston Corporation makes four products in a single facility. Data concerning these products appear below: ProductsABCDSelling price per unit$ 42.30$ 50.00$ 37.60$ 33.50Variable manufacturing cost per unit$ 20.80$ 30.70$ 21.00$ 19.90Variable selling cost per unit$ 2.70$ 2.10$ 1.00$ 2.40Milling machine minutes per unit3.304.102.601.30Monthly demand in units1,0004,0003,0003,000 The milling machines are potentially the constraint in the production facility. A total of 28,200 minutes are available per month on these machines. Up to how much should the company be willing to pay for one additional minute of milling machine time if the company has made the best use of the existing milling machine capacity? $4.20 $11.20 $18.80 $0.00
$23,500
Creswell Corporation's fixed monthly expenses are $21,500 and its contribution margin ratio is 60%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $75,000? $8,500 $45,000 $23,500 $53,500
A
Cybil Baunt just inherited a 1958 Chevy Impala from her late Aunt Joop. Aunt Joop purchased the car 40 years ago for $8,000. Cybil is either going to sell the car for $10,000 or have it restored and then sell it for $22,000. The restoration will cost $9,000. Cybil would be financially better off by: $3,000 to have the vehicle restored $6,000 to have the vehicle restored $9,000 to have the vehicle restored $11,000 to have the vehicle restored
increase of $500
Data concerning Lemelin Corporation's single product appear below: Per UnitPercent of SalesSelling price $230 100% Variable expenses 115 50% Contribution margin $115 50% The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month. The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? decrease of $11,000 increase of $11,500 decrease of $500 increase of $500
2870 units
Data concerning Sinisi Corporation's single product appear below: Selling price per unit$ 200.00Variable expense per unit$ 58.00Fixed expense per month$ 407,540 The break-even in monthly unit sales is closest to: 2,038 units 7,027 units 2,870 units 3,978 units
$198,000
Data for January for Bondi Corporation and its two major business segments, North and South, appear below: Sales revenues, North $ 660,000 Variable expenses, North $ 383,000 Traceable fixed expenses, North $ 79,000 Sales revenues, South $ 510,000 Variable expenses, South $ 291,000 Traceable fixed expenses, South $ 66,000 In addition, common fixed expenses totaled $179,000 and were allocated as follows: $93,000 to the North business segment and $86,000 to the South business segment. A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is: $105,000 $383,000 $198,000 $184,000
$170,400
Data for January for Bondi Corporation and its two major business segments, North and South, appear below: Sales revenues, North$ 568,000Variable expenses, North$ 329,600Traceable fixed expenses, North$ 68,000Sales revenues, South$ 439,000Variable expenses, South$ 250,500Traceable fixed expenses, South$ 56,800 In addition, common fixed expenses totaled $154,000 and were allocated as follows: $80,000 to the North business segment and $74,000 to the South business segment. A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is: $90,400 $329,600 $170,400 $158,400
$31,500
Fabri Corporation is considering eliminating a department that has an annual contribution margin of $23,000 and $77,000 in annual fixed costs. Of the fixed costs, $22,500 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be: ($54,000) $54,000 ($31,500) $31,500
$10,000
Fabri Corporation is considering eliminating a department that has an annual contribution margin of $35,000 and $70,000 in annual fixed costs. Of the fixed costs, $25,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be: $10,000 ($10,000) $35,000 ($35,000)
$4,560
Gayne Corporation's contribution margin ratio is 12% and its fixed monthly expenses are $84,000. If the company's sales for a month are $738,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change. $565,440 $654,000 $88,560 $4,560
$6000
Given the following data: Selling price per unit $ 2.00 Variable production cost per unit $ 0.30Fixed production cost $ 3,000 Sales commission per unit $ 0.20 Fixed selling expenses $1,500 The break-even point in dollars is: $6,000 $4,500 $2,647 $4,000
$9,000
Golebiewski Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (5,000 units)$ 150,000Variable expenses112,500Contribution margin37,500Fixed expenses35,250Net operating income$ 2,250 The margin of safety in dollars is closest to: $2,250 $9,000 $35,250 $37,500
$134,694
Gulinson Corporation has two divisions: Division A and Division B. Data from the most recent month appear below: Total CompanyDivision ADivision BSales $ 591,000 $ 222,000 $ 369,000 Variable expenses 275,580113,220162,360 Contribution margin 315,42010 8,780206,640 Traceable fixed expenses 195,00066,000 129,000Segment margin 120,420 $ 42,780 $ 77,640 Common fixed expenses 65,010 Net operating income $ 55,410 The break-even in sales dollars for Division A is closest to: $134,694 $184,531 $487,179 $267,367
decrease $2,100
Houpe Corporation produces and sells a single product. Data concerning that product appear below: Per UnitPercent of SalesSelling price $ 140 100% Variable expenses 42 30% Contribution margin $ 98 70% Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month. Management is considering using a new component that would increase the unit variable cost by $5. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 300 units. What should be the overall effect on the company's monthly net operating income of this change? decrease of $2,100 decrease of $27,900 increase of $2,100 increase of $27,900
$98200
J Corporation has two divisions. Division A has a contribution margin of $79,300 and Division B has a contribution margin of $126,200. If total traceable fixed expenses are $72,400 and total common fixed expenses are $34,900, what is J Corporation's net operating income? $168,000 $170,600 $133,100 $98,200
28%
Jerrel Corporation sells a product for $230 per unit. The product's current sales are 24,000 units and its break-even sales are 17,280 units. The margin of safety as a percentage of sales is closest to: 61% 28% 72% 39%
$35,100
Jilk Incorporated's contribution margin ratio is 60% and its fixed monthly expenses are $49,500. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $141,000? $84,600 $6,900 $35,100 $91,500
10.0
Junior Bodway, Incorporated, has provided the following budgeted data: Sales 10,000units Selling price $ 50per unit Variable expense $ 30per unit Fixed expense $ 180,000 At the budgeted sales level of 10,000 units, what is the company's degree of operating leverage? 10.0 6.0 22.5 5.0
increase of $7040
Kuzio Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $ 130 100% Variable expenses 52 40% Contribution margin $ 78 60% The company is currently selling 5,000 units per month. Fixed expenses are $216,000 per month. The marketing manager believes that a $7,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? increase of $7,040 increase of $14,040 decrease of $7,000 decrease of $7,040
$26 per fan
Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $31. The following cost data per fan is based on a full capacity of 153,000 fans produced each period. Direct materials $ 8 Direct labor $ 6 Manufacturing overhead (60% variable and 40% unavoidable fixed) $ 10 A special order has been received by Landor for a sale of 20,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $6 per fan for shipping. Landor is now selling 133,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? $26 per fan $30 per fan $28 per fan $20 per fan
$1,188,444
Logsdon Corporation produces and sells a single product whose contribution margin ratio is 63%. The company's monthly fixed expense is $720,720 and the company's monthly target profit is $28,000. The dollar sales to attain that target profit is closest to: $471,694 $454,054 $1,188,444 $1,144,000
($30,000)
Lusk Corporation produces and sells 10,000 units of Product X each month. The selling price of Product X is $40 per unit, and variable expenses are $32 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $70,000 of the $120,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be: ($30,000) $30,000 $40,000 ($40,000)
500 mL
Lydic Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (4,000 units): $ 160,000 Variable expenses: 112,000 Contribution margin: 48,000: Fixed expenses: 38,400: Net operating income $ 9,600 The degree of operating leverage is closest to: 5.00 0.20 16.67 0.06
$1,383,200
Majid Corporation sells a product for $190 per unit. The product's current sales are 42,200 units and its break-even sales are 34,920 units. What is the margin of safety in dollars? $5,490,218 $8,018,000 $6,634,800 $1,383,200
16%
Maruska Corporation has provided the following data concerning its only product: Selling price$ 180per unitCurrent sales29,800unitsBreak-even sales25,032units The margin of safety as a percentage of sales is closest to: 19% 16% 84% 81%
$842,281
Maziarz Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $ 220.00 Variable expense per unit $ 72.60 Fixed expense per month $ 548,328 Assume the company's target profit is $16,000. The dollar sales to attain that target profit is closest to: $564,328 $1,710,085 $1,038,898 $842,281
(30,800)
Mcfarlain Corporation is presently making part U98 that is used in one of its products. A total of 7,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per UnitDirect materials $ 3.70 Direct labor $ 3.60 Variable overhead $ 1.40 Supervisor's salary $ 4.00 Depreciation of special equipment $ 3.90 Allocated general overhead $ 4.10 An outside supplier has offered to produce and sell the part to the company for $17.10 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. If management decides to buy part U98 from the outside supplier rather than to continue making the part, what would be the annual financial advantage (disadvantage)? ($30,800) $25,200 $30,800 ($25,200)
($34,200)
Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $580,000, variable expenses of $301,600, and traceable fixed expenses of $186,500. The Alpha Division has sales of $510,000, variable expenses of $178,500, and traceable fixed expenses of $222,100. The total amount of common fixed expenses not traceable to the individual divisions is $235,500. What is the company's net operating income? $374,400 $201,300 $609,900 ($34,200)
(149,800)
Part S51 is used in one of Haberkorn Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per UnitDirect materials $ 6.30 Direct labor $ 5.70 Variable manufacturing overhead $ 4.80 Supervisor's salary $ 7.00 Depreciation of special equipment $ 8.60 Allocated general overhead $ 7.20 An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $17,000 of these allocated general overhead costs would be avoided. The annual financial advantage (disadvantage) for the company as a result of buying the part from the outside supplier would be: ($5,800) ($22,800) ($149,800) ($39,800)
($15,500)
Penagos Corporation is presently making part Z43 that is used in one of its products. A total of 5,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: An outside supplier has offered to produce and sell the part to the company for $20.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,000 of these allocated general overhead costs would be avoided. If management decides to buy part Z43 from the outside supplier rather than to continue making the part, what would be the annual financial advantage (disadvantage)? ($34,500) ($30,500) ($15,500) ($38,500)
($163,200)
Rebelo Corporation is presently making part E07 that is used in one of its products. A total of 17,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per UnitDirect materials $ 3.80 Direct labor $ 3.80 Variable manufacturing overhead $ 1.10 Supervisor's salary $ 2.50 Depreciation of special equipment $ 1.40 Allocated general overhead $ 8.60 An outside supplier has offered to make and sell the part to the company for $20.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. If management decides to buy part E07 from the outside supplier rather than to continue making the part, what would be the annual impact on the company's overall net operating income? ($6,800) ($163,200) $163,200 $6,800
22,500 Selling price per unit: sales/ quant. sold variabe expenses per unit: variable expenses/quantity sold unit cm= selling price per unit - variable expenses per unit profit= (unit CMxQ) - fixed expenses
Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (6,400 units): $ 428,800: Variable expenses: 300,800: Contribution margin: 128,000: Fixed expenses: 103,500: Net operating income: $ 24,500 If the company sells 6,300 units, its net operating income should be closest to: $23,979 $22,500 $24,500 $20,000
151.2%
Rushenberg Corporation's operating leverage is 10.8. If the company's sales volume increases by 14%, its net operating income should increase by about: 151.2% 14.0% 77.1% 10.8%
17.50
Sebree Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (7,000 units) $ 280,000 Variable expenses 168,000 Contribution margin 112,000 Fixed expenses 105,600 Net operating income $ 6,400 The degree of operating leverage is closest to: 0.06 17.50 43.75 0.02
$24,800
Sjostrom Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (7,000 units)$ 280,000Variable expenses182,000Contribution margin98,000Fixed expenses84,000Net operating income$ 14,000 If the selling price increases by $3 per unit and the sales volume decreases by 600 units, the net operating income would be closest to: $24,800 $35,000 $19,200 $32,000
($50,000)
The Bharu Violin Corporation has the capacity to manufacture and sell 5,000 violins each year but is currently only manufacturing and selling 4,800. The following data relate to annual operations at 4,800 units: Per ViolinSelling price $ 600 Manufacturing costs: Variable $ 130 Fixed $ 270 Selling and administrative costs: Variable $ 20 Fixed $ 40 Woolgar Symphony Orchestra is interested in purchasing Bharu's excess capacity of 200 units but only if they can get the violins for $350 each. This special order would not affect regular sales or the total fixed costs. Assume that Bharu is manufacturing and selling at capacity (5,000 units). Any special order will mean a loss of regular sales. Under these conditions if the special order from Woolgar Symphony Orchestra is accepted, the financial advantage (disadvantage) Bharu for the year should be: $20,000 ($22,000) ($28,000) ($50,000)
$(22,000)
The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow: Sales of 15,000 units $ 150,000 Variable expenses1 20,000 Contribution margin 30,000 Fixed expenses 40,000 Net operating loss $ (10,000) If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. The annual financial advantage (disadvantage) for the company from discontinuing the production and sale of Doombugs would be: ($30,000) $10,000 ($22,000) $18,000
4.35
The July contribution format income statement of Doxtater Corporation appears below: Sales $ 564,400 Variable expenses 312,800 Contribution margin 251,600 Fixed expenses 193,800 Net operating income $ 57,800 The degree of operating leverage is closest to: 0.23 0.10 4.35 9.76
159000
The Melville Corporation produces a single product called a Pong. Melville has the capacity to produce 60,000 Pongs each year. If Melville produces at capacity, the per unit costs to produce and sell one Pong are as follows: Direct materials $ 15 Direct labor $ 12 Variable manufacturing overhead $ 8 Fixed manufacturing overhead $ 9 Variable selling expense $ 8 Fixed selling expense $ 3 The regular selling price for one Pong is $80. A special order has been received by Melville from Mowen Corporation to purchase 6,000 Pongs next year. If this special order is accepted, the variable selling expense will be reduced by 75%. However, Melville will have to purchase a specialized machine to engrave the Mowen name on each Pong in the special order. This machine will cost $9,000 and it will have no use after the special order is filled. The total fixed manufacturing overhead and selling expenses would be unaffected by this special order. Assume that direct labor is a variable cost. Assume Melville anticipates selling only 50,000 units of Pong to regular customers next year. If Mowen Corporation offers to buy the special order units at $65 per unit, the annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: $60,000 ($90,000) $159,000 $36,000
$8,800
The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $26,800. If these calculators are upgraded at a total cost of $10,000, they can be sold for a total of $30,000. As an alternative, the calculators can be sold in their present condition for $11,200. What is the financial advantage (disadvantage) to the company from upgrading the calculators? $8,800 ($18,000) $20,000 ($8,000)
$10,000
The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $130,000, they can be sold for a total of $190,000. As an alternative, the calculators can be sold in their present condition for $50,000. What is the financial advantage (disadvantage) to the company from upgrading the calculators? $140,000 ($690,000) $10,000 ($60,000)
processed further and then sold
The Wyeth Corporation produces three products, A, B, and C, from a single raw material input. Product A can be sold at the split off point for $40,000, or it can be processed further at a total cost of $15,000 and then sold for $58,000. Joint costs total $60,000 annually. Product A should be: discontinued because revenues after further processing are less than total joint costs. sold at the split-off point. processed further and then sold. processed further only if its share of the total joint costs is less than the incremental revenues from further processing.
JT,SM, VD
The constraint at Pickrel Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: VDJTSM Selling price per unit $ 344.85 $ 415.40 $ 119.32 Variable cost per unit $ 270.18 $ 310.88 $ 91.96 Minutes on the constraint 5.70 6.70 1.90 Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized.
$13.10
The constraint at Pickrel Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: VDJTSMSelling price per unit$ 344.85$ 415.40$ 119.32Variable cost per unit$ 270.18$ 310.88$ 91.96Minutes on the constraint5.706.701.90 Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of this constrained resource? $15.60 per minute $13.10 per minute $104.52 per unit $27.36 per unit
$10.29 per minute
The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below: WXKDFS Selling price per unit $ 335.01 $ 228.29 $ 199.04 Variable cost per unit $ 259.60 $ 173.42 $ 159.95 Minutes on the constraint 5.80 4.10 3.80 Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? $75.41 per minute $39.09 per minute $10.29 per minute $13.38 per minute
$583,462
The contribution margin ratio of Mountain Corporation's only product is 52%. The company's monthly fixed expense is $296,400 and the company's monthly target profit is $7,000. The dollar sales to attain that target profit is closest to: $570,000 $157,768 $583,462 $154,128
($192,500)
The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this product for last year appear below: Sales$ 921,000Variable expenses$ 404,500Fixed manufacturing expenses$ 335,000Fixed selling and administrative expenses$ 242,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $206,500 of the fixed manufacturing expenses and $117,500 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued. What would be the financial advantage (disadvantage) from dropping product D74F? $192,500 $60,500 ($60,500) ($192,500)
($173,000)
The management of Furrow Corporation is considering dropping product L07E. Data from the company's budget for the upcoming year appear below: Sales $ 830,000 Variable expenses $ 365,000 Fixed manufacturing expenses $ 291,000 Fixed selling and administrative expenses $ 166,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $186,000 of the fixed manufacturing expenses and $106,000 of the fixed selling and administrative expenses are avoidable if product L07E is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be: $8,000 ($173,000) ($8,000) $173,000
$450
Thomason Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (1,000 units)$ 40,000Variable expenses30,000Contribution margin10,000Fixed expenses7,000Net operating income$ 3,000 If the variable cost per unit increases by $1, spending on advertising increases by $2,000, and unit sales increase by 50 units, the net operating income would be closest to: $450 $1,000 $2,150 $9,450
Only materials costs are relevant
Two alternatives, code-named X and Y, are under consideration at Guyer Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y Materials costs $ 41,000 $ 59,000 Processing costs $ 45,000 $ 45,000 Equipment rental $ 17,000 $ 17,000 Occupancy costs $ 16,000 $ 24,000 Are the materials costs and processing costs relevant in the choice between alternatives X and Y? Neither materials costs nor processing costs are relevant Only processing costs are relevant Only materials costs are relevant Both materials costs and processing costs are relevant
$(26,000)
Two alternatives, code-named X and Y, are under consideration at Guyer Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y Materials costs $ 41,000 $ 59,000 Processing costs $ 45,000 $ 45,000 Equipment rental $ 17,000 $ 17,000 Occupancy costs $ 16,000 $ 24,000 What is the financial advantage (disadvantage) of Alternative Y over Alternative X? $(132,000) $119,000 $145,000 $(26,000)
contribution margin per unit of the constrained resource
United Industries manufactures a number of products at its highly automated factory. The products are very popular, with demand far exceeding the factory's capacity. To maximize profit, management should rank products based on their: gross margin contribution margin selling price contribution margin per unit of the constrained resource
$250,000
Variable expenses for Alpha Corporation are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year: $250,000 $375,000 $600,000 $150,000
$47 per unit
Younes Incorporated manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as P06. Data concerning this product are given below: Per UnitSelling price $ 220 Direct materials $ 38 Direct labor $ 1 Variable manufacturing overhead $ 8Fixed manufacturing overhead $ 16 Variable selling expense $ 4 Fixed selling and administrative expense $ 16 The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost. The company has received a special, one-time-only order for 400 units of component P06. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. Assuming that Younes has excess capacity and can fill the order without cutting back on the production of any product, what is the minimum price per unit below which the company should not accept the special order? $47 per unit $83 per unit $63 per unit $220 per unit
$169 per unit
Younes Incorporated manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as P06. Data concerning this product are given below: Per UnitSelling price$ 220Direct materials$ 38Direct labor$ 1Variable manufacturing overhead$ 8Fixed manufacturing overhead$ 16Variable selling expense$ 4Fixed selling and administrative expense$ 16 The above per unit data are based on annual production of 4,000 units of the component. Assume that direct labor is a variable cost. What is the current contribution margin per unit for component P06 based on its selling price of $220 and its annual production of 4,000 units? $51 per unit $137 per unit $169 per unit $173 per unit
