46) Assuming Eagan Company can increase the selling price of product B to  $21,000, all other information remaining constant, operating income  will

A) decrease $ 2,000.

B) decrease $ 6,000.

C) increase $21,000.

D) increase $ 2,000.

47) The item that restricts or constrains the production or sale of a product or service is the

A) limiting factor.

B) selling price.

C) unlimited resource.

D) contribution approach.

48) The average number of times the inventory is sold per year is the

A) inventory shortage.

B) cost of goods sold.

C) cost of goods available for sale.

D) inventory turnover.

Drummer produces two products, A and B.  The following information is available for these two products:



Selling price per unit



Variable cost per unit



Total fixed costs

$  10,000 

Total production capacity

10,000 units

49) If a maximum of 10,000 units of A and/or B can be sold, it is best to

A) produce B only.

B) produce A only.

C) produce 2,500 units of A and 7,500 units of B.

D) produce 5,000 units of A and 5,000 units of B.

50) If only 5,000 units of each product, A and B can be sold, it would be best to

A) discontinue A as it results in a net loss of $2.00 per unit, and continue producing B.

B) produce only 2,500 units of A and 5,000 units of B to maximize profits.

C) produce 5,000 units of both A and B.

D) discontinue the production of both A and B.

Beem Corporation manufactures two products, X and Y.  The following information was gathered:



Selling price per unit



Variable cost per unit



Total fixed costs

$  50,000 

51) Beem Corporation manufactures and sells three units of X for every two units of Y.  If the company sold 1,500 units of X, it would report operating income (loss) of

A) $23,000.

B) $15,000.

C) $(35,000).

D) $(27,000).

52) If Beem Corporation could produce and sell either 3,000 units of X or 2,000 units of Y at full capacity, it should produce and sell

A) 2,000 units of Y and none of X.

B) 1,000 units of Y and 1,500 units of X.

C) 3,000 units of X and none of Y.

D) either X or Y, there is no difference.

53) Assume Beem Corporation could produce and sell any mix of product X and Y at full capacity.  If product X takes twice as long to manufacture as product Y and only 200,000 hours of plant capacity are available, it is best for Beem to produce

A) only X.

B) only Y.

C) either X or Y, there is no difference.

D) an equal number of X and Y.

54) Which of the following is NOT a pricing decision?

A) Setting the price of a new product.

B) Responding to a special order price

C) Responding to a new price of a competitor

D) Setting the price of products sold under private labels

55) The additional cost resulting from producing and selling one additional unit is called the

A) marginal cost.

B) common cost.

C) opportunity cost.


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