1. The Bash Company has two divisions—Office and Home . The
divisions have the following revenues and expenses:
Office Home
Sales 800,000 900,000
Variable costs (280,000) (200,000)
Direct fixed costs (430,000) (320,000)
Allocated corporate costs (120,000) (250.000)
Net income (loss) (30,000) 130,000
The management at Bash is pondering the elimination of the Office
Division. If the Office Division were eliminated, its direct fixed
costs could be avoided, but its total corporate costs would not be
affected. Given these data, the elimination of the Office Division
would result in an overall company net income of:
a. $100,000. c. $(300,000).
b. $130,000. d. $10,000.
2. Benoit Company produces three products, D, E, and F. Cost and
revenue characteristics of the three products follow (per
unit):
Product
.
D E F
Selling price $40 $25 $37
Less variable expenses:
Direct materials 12 8 6
Labor and overhead 13 9 19
Total variable expenses 25 17
25
Contribution margin $15 $ 8 $12
Contribution margin
ratio
40%
25%
30%
Demand for the company’s products is very strong, with far more
orders on hand each month than the company has raw materials
available to produce. The same material is used in each product.
The material costs $2 per pound, with a maximum of 8,000 pounds
available each month. In what order should the company fill the
demand for the three products?
a. D,E,F
b. E.D.F
c. F,D,E
d. E,F,D
Questions 3 and 4 refer to the following:
The Munsen Company produces a single product called a Doodad.
Munsen has the capacity to produce 50,000 Doodads each year. If
Munsen produces at capacity, the per unit costs to produce and sell
one Doodad are as follows:
Direct materials $24
Direct labor 15
Variable factory overhead 9
Fixed factory overhead 6
Variable selling expense 8
Fixed selling expense 7
The regular selling price for one Doodad is $75. A special order
has been received by Munsen from Shoel Company to purchase 8,000
Doodads during 2015. If this special order is accepted, the
variable selling expense will be reduced by 50%. However, Munsen
will have to purchase a specialized machine to engrave the Shoel
name on each Doodad in the special order. This machine will cost
$24,000 and it will have no use after the special order is filled
and no resale value. All other fixed costs will be unaffected by
the special order.
3. Assume that Munsen can only sell 42,000 units of Doodads to
regular customers during 2015. What is the relevant cost per unit
of producing the special order for Shoel?
a. $51.00
b. $69.00
c. $55.00
d. $58.00
4. Assume Munsen can sell 44,000 units of Doodads to regular
customers during 2015. If Shoel Company offers to buy the special
order units at $69 per unit, the effect of accepting the special
order on Munsen’s net income for 2015 will be a:
a. $106,000 increase.
b. $112,000 increase.
c. $74,000 increase.
d. $88,000 increase.
5. Manfield Co. is considering the sale of Product X, created from
a joint process. Joint processing costs up to the split-off point
allocated to Product X are $16,000. Product X can be sold at the
split-off point for $25,000. Alternatively, Manfield can process
Product X further at a cost of $7,000 and sell the the product for
$35,000 after further processing. The dollar advantage or
disadvantage of a decision to further process Product X would
be:
a. advantage of $12,000
b. disadvantage of $7,000
c. advantage of $3,000
d. disadvantage of $2,000
Solution-1 | |
If office Division will be eliminated , Net Income would be :- | |
Net Income from Home Division | $130,000.00 |
Less: Allocated Corporate cost of Office division: | -$120,000.00 |
Net Income after eliminaton | $10,000.00 |
Correct answer will be $10000
As HOMEWORKLIB RULES only one question can be solved.
1. The Bash Company has two divisions—Office and Home . The divisions have the following revenues...
1. The Bash Company has two divisions—Office and Home . The divisions have the following revenues and expenses: Office Home Sales 800,000 900,000 Variable costs (280,000) (200,000) Direct fixed costs (430,000) (320,000) Allocated corporate costs (120,000) (250.000) Net income (loss) (30,000) 130,000 The management at Bash is pondering the elimination of the Office Division. If the Office Division were eliminated, its direct fixed costs could be avoided, but its total corporate costs would not be affected. Given these data, the...
1. The Bash Company has two divisions—Office and Home . The divisions have the following revenues and expenses: Office Home Sales 800,000 900,000 Variable costs (280,000) (200,000) Direct fixed costs (430,000) (320,000) Allocated corporate costs (120,000) (250.000) Net income (loss) (30,000) 130,000 The management at Bash is pondering the elimination of the Office Division. If the Office Division were eliminated, its direct fixed costs could be avoided, but its total corporate costs would not be affected. Given these data, the...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $325,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Selling Product Price A $ 15.00 per Quarterly Output 12,000 pounds B 18,800 pounds $ 9.00...
1. Part U16 is used by Mcvean Corporation to make one of its products. A total of 18,000 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 Unit Direct materials $ 3.90 Direct labor $ 8.50 Variable manufacturing overhead $ 9.00 Supervisor's salary $ 4.40 Depreciation of special equipment $ 2.80 Allocated general overhead $ 8.00 An outside supplier has offered...
Required Information (The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 40 Beta $ 24 28 20 Direct materials...
A customer has requested that Lewelling Corporation fill a special order for 2,500 units of product S47 for $30 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $21.40: Direct materials $ 6.10 Direct labor 4.00 Variable manufacturing overhead 3.20 Fixed manufacturing overhead 8.10 Unit product cost $ 21.40 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed...
Required information [The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 42 Beta $ 21 28 با Direct materials...
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 102,000 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 2.10 $ 3.00 $ 0.50 $ 3.65 $ 1.90 $ 2.00 The normal selling price is $21.00 per unit. The company's capacity is 134,400 units per year. An order...
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 94,800 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 2.10 $ 3.00 $ 0.90 $ 5.05 $ 1.80 $ 2.00 The normal selling price is $19.00 per unit. The company's capacity is 127,200 units per year. An order...