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Multiple Choice Question 153 A company has three product lines, one of which reflects the following...
A company has three product lines, one of which reflects the following results: Sales $170,000 Variable...
A company has three product lines, one of which reflects the following results: Sales $170,000 Variable expenses $100,000 Contribution Margin $70,000 Fixed expenses $110,000 Net loss $(40,000) If this product line is eliminated, 60% of the fixed expenses can be eliminated. If management decides to eliminate this product line, the company's net income will increase/decrease by?
9. A company has three product lines, one of which reflects the following results: Sales $241000...
9. A company has three product lines, one of which reflects the following results: Sales $241000 Variable expenses 139000 Contribution margin 102000 Fixed expenses 130000 Net loss $ (28000) If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company’s net income will decrease by $24000. increase by $24000. increase by $28000. decrease by $102000. 10....
7. Crane Company is contemplating the replacement of an old machine with a new one. The following...
7. Crane Company is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $340000 $680000 Accumulated Depreciation 102000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $275000 $204000 If the old machine is replaced, it can be sold for $27200. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing...
Sunland Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented...
Sunland Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $470000 $170000 $65000 $705000 Variable expenses 310000 110000 58000 478000 Contribution margin 160000 60000 7000 227000 Fixed expenses 75000 35000 22000 132000 Net income (loss) $85000 $ 25000 $(15000) $95000 Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the...
Which of the following is an assumption underlying standard CVP analysis? Multiple Choice The price of...
Which of the following is an assumption underlying standard CVP analysis? Multiple Choice The price of a product or service is expected to change as volume changes. 0 Fixed expenses will change as volume increases. In multiproduct companies, the sales mix is constant. С C In manufacturing companies, inventories always change. If sales volume increases and all other factors remain constant, then the: Multiple Choice net operating income will decrease. O margin of safety will increase. contribution margin ratio will...
Momentum Rollerblades has three product lines—D, E, and F. The following information is available: D...
Momentum Rollerblades has three product lines—D, E, and F. The following information is available: D E F Sales revenue $70,000 $40,000 $31,000 Variable costs (20,000) (5000) (11,000) Contribution margin $50,000 $35,000 $20,000 Fixed costs (10,000) (15,000) (24,000) Operating income (loss) $40,000 $20,000 $(4000) The company is deciding whether to drop product line F because it has an operating loss. Assume that $22,000 of total fixed costs could be eliminated by dropping F. What effect would this decision have on...
The following monthly segmented income statement is for Condiment Company, which has three separate product lines...
The following monthly segmented income statement is for Condiment Company, which has three separate product lines (A, B, and C). A B C Total Sales revenue $37,500 $50,000 $12,500 $100,000 Variable costs $16,000 $27,500 $5,000 $48,500 Contribution margin $21,500 $22,500 $7,500 $51,500 Direct fixed costs $19,500 $16,000 $3,500 $39,000 Allocated fixed costs $3,750 $5,000 $1,250 $10,000 Profit (loss) $(1,750) $1,500 $2,750 $2,500 Management is concerned about the losses associated with product line A and is considering dropping this product line....
Case #4 Penna Company manufactures three product lines. The following operating data have been gathered for...
Case #4 Penna Company manufactures three product lines. The following operating data have been gathered for the most recent quarter: Caxton Tinta Bozze Total Sales $750,000 $300,000 $450,000 $1,500,000 Variable costs $450,000 $150,000 $300,000 $900,000 Contribution margin 300,000 150,000 150,000 600,000 Fixed costs Rent $37,500 $15,000 $22,500 $75,000 Depreciation $45,000 $18,000 $27,000 $90,000 Utilities $30,000 $7,500 $22,500 $60,000 Supervision $22,500 $7,500 $45,000 $75,000 Maintenance S22,500 $9,000 $13,500 $45,000 Administrative $45,000 $30,000 $75,000 $150,000 Total fixed costs 202,500 87,000 205,500 495,000...
Mission Company has three product lines: D, E, and F. The following information is available: D...
Mission Company has three product lines: D, E, and F. The following information is available: D E F Sales revenue $ 84,000 $45,000 $ 20,000 Variable expenses $ 44,000 $26,000 $ 12,000 Contribution margin $ 40,000 $19,000 $ 8,000 Fixed expenses $ 12,000 $15,000 $17,000 Operating income (loss) $ 28,000 $4000 $(9,000) Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Mission Company discontinues product line F and...
Clarington Company makes three models of phasers. Information on the three products is given below: Sales...
Clarington Company makes three models of phasers. Information on the three products is given below: Sales Variable expenses Contribution margin Stunner $298,000 146,000 152,000 118,000 Double-Set $447,000 198,500 248,500 205,700 $42,800 Mega-Power $186,250 138,000 48,250 83,800 Fixed expenses Net income $34,000 ($35,550) Fixed expenses consist of $273,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Stunner), $75,300 (Double-Set), and $29,200 (Mega-Power). The common costs will be incurred regardless of how...
Which of the following is an assumption underlying standard CVP analysis? Multiple Choice The price of a product or service is expected to change as volume changes. 0 Fixed expenses will change as volume increases. In multiproduct companies, the sales mix is constant. С C In manufacturing companies, inventories always change. If sales volume increases and all other factors remain constant, then the: Multiple Choice net operating income will decrease. O margin of safety will increase. contribution margin ratio will...
Case #4 Penna Company manufactures three product lines. The following operating data have been gathered for the most recent quarter: Caxton Tinta Bozze Total Sales $750,000 $300,000 $450,000 $1,500,000 Variable costs $450,000 $150,000 $300,000 $900,000 Contribution margin 300,000 150,000 150,000 600,000 Fixed costs Rent $37,500 $15,000 $22,500 $75,000 Depreciation $45,000 $18,000 $27,000 $90,000 Utilities $30,000 $7,500 $22,500 $60,000 Supervision $22,500 $7,500 $45,000 $75,000 Maintenance S22,500 $9,000 $13,500 $45,000 Administrative $45,000 $30,000 $75,000 $150,000 Total fixed costs 202,500 87,000 205,500 495,000...
Clarington Company makes three models of phasers. Information on the three products is given below: Sales Variable expenses Contribution margin Stunner $298,000 146,000 152,000 118,000 Double-Set $447,000 198,500 248,500 205,700 $42,800 Mega-Power $186,250 138,000 48,250 83,800 Fixed expenses Net income $34,000 ($35,550) Fixed expenses consist of $273,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Stunner), $75,300 (Double-Set), and $29,200 (Mega-Power). The common costs will be incurred regardless of how...
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