Question

Questions 5, 6, and 7 refer to the following information $19.00 each. Total costs were as follows: 65.000 $451,100 - 123,500 $93,600 82,550 Last year, X Company sold 65,000 units of its only product for $19.00 Sales Cost of goods sold Variable Fixed Selling and administrative Variable Fixed At the end of the year, a company offered to buy an units of capacity to produce the additional units, and even though there would have been no addition costs, it rejected the offer. ut only for $12.00 each. X Company had the been no additional selling and administrative 8 pt 5. If X Company had accepted the special order, firm profits would have increased by 5. AO $5,712 BO $8,282 CO $12,009 DO 517,413 EO $25,249 FO $36,612 8 pt 6. X Company's production manager thought that the special order units might have required additional direct material and direct labor costs per unit of $0.81 and 80.21, respectively, and the rental of special equipment for $1,500. The combined effect of these changes would have been to reduce the special order profit by 6. AO $4,955 BO $6,590 CO $8,764 DO $11,657 EO $15,503 FO $20,620 8p 17 X Company's marketing manager felt that in order for regular sales to continue at 65,000 units this year, the company would have had to reduce the regular selling price this year to $18.61. The result of this price reduction would have been to reduce X Company's profits this year by 7. AO $25,350 BO 833,716 CO 844,812 DO 859,639 EO $79,320 FO $105,496 - Y C o nd ite only two products - A and B:

Answer 1

5
Variable cost of goods sold	6.94	=451100/65000
Incremental revenue	59880	=4990*12
Incremental costs:
Variable cost of goods sold	34631	=4990*6.94
Total Incremental costs	34631
Profits increase	25249
Option E $25,249 is correct
6
Increase in cost of goods sold	5090	=4990*(0.81+0.21)
Rental of Equipment	1500
Total effect on profit	6590
Option B $6,590 is correct
7
Reduction in Profits	25350	=65000*(19-18.61)
Option A $25,350 is correct