The Chou Company provided the following information regarding its one and only product, rollers:

Direct labour

$45,000

Direct materials used

30,000

Fixed factory overhead

42,000

Fixed selling and administrative expenses

8,000

Variable factory overhead

28,000

Variable selling and administrative expenses

12,000

Selling price per unit

20

Units produced and sold

10,000

26) What is the current net income?

A) $200,000

B) $165,000

C) $35,000

D) $85,000

27) Assuming there is excess capacity, what would be the effect of accepting a special order for 2,000 units at a price of $16.00 per roller?

A) Net income would decrease by $1,000.

B) Net income would increase by $9,000.

C) Net income would decrease by $8,000.

D) Net income would increase by $3,000.

Van Horn, Inc. has been producing and selling 20,000 meters a year.  The company has the capacity to produce 25,000 meters with its present facilities.  The following information is also available:

Selling price per unit

$300

Variable costs per unit:Manufacturing

$110

Selling and Administrative

50

Fixed costs in total:Manufacturing

$1,280,000

Selling and Administrative

560,000

28) Currently, the contribution approach cost of manufacturing one meter is

A) $174.

B) $160.

C) $224.

D) $252.

29) Currently, the absorption approach cost of manufacturing one meter is

A) $160.

B) $224.

C) $174.

D) $252.

30) If a special order is accepted for 5,000 meters at a price of $250 per unit, net income would

A) increase by $200,000.

B) increase by $136,000.

C) decrease by $500,000.

D) decrease by $260,000.

The Finn Company provided the following information regarding its one and only product, phones:

Selling price per unit

$         80

Direct materials used

120,000

Direct labour

180,000

Variable factory overhead

112,000

Variable selling and administrative expenses

48,000

Fixed factory overhead

168,000

Fixed selling and administrative expenses

32,000

Units produced and sold

10,000

31) The unit cost of a phone under the absorption approach is

A) $20.00.

B) $46.00.

C) $66.00.

D) $58.00.

32) The unit cost of a phone using the contribution approach is

A) $66.00.

B) $20.00.

C) $58.00.

D) $46.00.

33) What is the current net income?

A) $800,000

B) $660,000

C) $140,000

D) $340,000

34) Assuming there is excess capacity, what would be the effect of accepting a special order for 2,000 units at a price of $64.00 per phone?

A) Net income would decrease by $32,000.

B) Net income would increase by $640,000.

C) Net income would increase by $12,000.

D) Net income would increase by $36,000.

35) In a special order decision, fixed costs that do NOT differ between two alternatives are

A) of major importance to the decision.

B) considered opportunity costs.

C) important only if they are a material dollar amount.

D



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *