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devry acct346 week 6 quiz




Question;(TCO 7) Elliot?s Escargots sells commercial and home snail;extraction tools and serving pieces. Currently, the Serving Pieces Section;takes up approximately 50% of the company?s retail floor space. The CEO of;Elliot?s wants to decide if the company should continue offering Serving Pieces;or focus only on Snail Extraction Tools. If the Serving Pieces are dropped;salaries and other direct fixed costs can be avoided and Snail Extraction sales;would increase by 13%. Allocated fixed costs are assigned based on relative;sales.;Snail Extraction Serving;Tools Pieces Total;Sales $1,200,000 $800,000 $2,000,000;Less cost of goods sold 500,000 700,000 1,200,000;Contribution margin 700,000 100,000 800,000;Less Avoidable direct fixed costs;Salaries 175,000 175,000 350,000;Other 60,000 60,000 120,000;Less Unavoidable allocated fixed costs;Rent 14,118 9,882 24,000;Insurance 3,529 2,471 6,000;Cleaning 4,117 2,883 7,000;Executive salary 76,470 53,530 130,000;Other 7,058 4,942 12,000;Total costs 340,292 308,708 649,000;Net income ($359,708) ($208,708) $151,000;Prepare an incremental analysis in good form to determine;the incremental effect on profit of discontinuing the snail extraction tool;line.;Question 2. Question;(TCO 4) Paschal?s Parasailing Enterprises has estimated that;fixed costs per month are $115,600 and variable cost per dollar of sales is;$0.35 (6 points).;What is the break-even point per month in sales?;What level of sales is needed for a monthly profit of;$70,000?;For the month of August, Paschal?s anticipates sales of;$600,000. What is the expected level of profit?;Question 3. Question;(TCO 6) Princess Cruise Lines has the following service;departments, concierge, valet, and maintenance. Expenses for these departments;are allocated to Mediterranean and transatlantic cruises. Expenses for the;departments are totaled (both variable and;components are combined) and as follows.;Concierge;$1,500,000;Valet;$2,750,000;Maintenance;$2,250,000;The sea miles logged are 5,000,000 for the Mediterranean and;20,000,000 for the transatlantic voyages.;Based upon the sea miles logged, allocate the service;department costs (6 points).;Question 4. Question;(TCO 9) Thurman Munster, the owner of Adams Family RVs, is;considering the addition of a service center his lot. The building and;equipment are estimated to cost $1,200,000, and both the building and equipment;will be depreciated over 10 years using the straight-line method. The building;and equipment have zero estimated residual value at the end of 10 years.;Munster?s required rate of return for this project is 12%. Net income related;to each year of the investment is as follows.;Revenue $450,000;Less;Material Cost $60,000;Labor 100,000;Depreciation 120,000;Other 10,000 290,000;Income before taxes;160,000;Taxes at 40% 64,000;Net Income $96,000;(A) Determine the net present value of the investment in the;service center. Should Munster invest in the service center?;(B) Calculate the internal rate of return of the investment;to the nearest 0.5%.;(C) Calculate the payback period of the investment.;(D) Calculate the accounting rate of return.;Question 5. Question;(TCO 5) The following information relates to Vice Versa;Ventures for calendar year 20XX, the company?s first year of operations.;Units produced 20,000;Units sold 15,000;Selling price per unit $30;Direct material per unit $5;Direct labor per unit $5;Variable manufacturing overhead per unit $2;Variable selling cost per unit $3;Annual fixed manufacturing overhead $160,000;Annual fixed selling and administrative expense $80,000;(a) Prepare an income statement using full costing.;(b) Prepare an income statement using variable costing.;Question;6. Question;(TCO 8) Leekee Shipyards has a new barnacle-removing product;for ocean-going vessels. The company invests $1,200,000 in operating assets and;plans to produce and sell 400,000 units per year. Leekee wants to make a return;on investment of 20% each year. Leekee needs to know what price to charge for;this product.;Use the absorption costing approach to determine the markup;necessary to make the desired return on investment based on the following;information.;Per Unit Total;Direct Materials $2.00;Direct Labor $1.50;Variable Manufacturing Overhead;$1.00;Fixed Manufacturing Overhead;$100,000;Variable Selling and Administrative Expense $0.10;Fixed Selling and Administrative Expense $100,000


Paper#39464 | Written in 18-Jul-2015

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