Description of this paper

finance homework mcq

Description

solution


Question

Question;126.What would the selling price per unit of;product N need to be after further processing in order for Payne Company to be;economically indifferent between selling N at the split-off point or processing;N further?;A.;$8.70;B.;$6.70;C.;$7.20;D.;$5.70;127.Marcell Corporation is considering two;alternatives that are code-named M and N. Costs associated with the;alternatives are listed below;Required;a.;Which costs are relevant and which are not;relevant in the choice between these two alternatives?;b.;What is the differential cost;between the two alternatives?;128.Costs associated with two;alternatives, code-named Q and R, being considered by Corniel Corporation are;listed below;Required;a.;Which costs are relevant and which are not;relevant in the choice between these two alternatives?;b.;What is the differential cost;between the two alternatives?;129.The management of Therriault Corporation is;considering dropping product U51Y. Data from the company's accounting system;appear below;All fixed expenses of the company are fully;allocated to products in the company's accounting system. Further investigation;has revealed that $280,000 of the fixed manufacturing expenses and $140,000 of;the fixed selling and administrative expenses are avoidable if product U51Y is;discontinued.;Required;What;would be the effect on the company's overall net operating income if product;U51Y were dropped? Should the product be dropped? Show your work!;130.Nutall Corporation is;considering dropping product N28X. Data from the company's accounting system;appear below;All fixed expenses of the company are fully;allocated to products in the company's accounting system. Further investigation;has revealed that $199,000 of the fixed manufacturing expenses and $114,000 of;the fixed selling and administrative expenses are avoidable if product N28X is;discontinued.;Required;a.;According to the company's;accounting system, what is the net operating income earned by product N28X?;Show your work!;b.;What would be the effect on the;company's overall net operating income of dropping product N28X? Should the;product be dropped? Show your work!;131.The management of Rodarmel Corporation is;considering dropping product G91Q. Data from the company's accounting system;appear below;All fixed expenses of the company;are fully allocated to products in the company's accounting system. Further;investigation has revealed that $57,000 of the fixed manufacturing expenses and;$40,000 of the fixed selling and administrative expenses are avoidable if;product G91Q is discontinued.;Required;a.;What is the net operating income;earned by product G91Q according to the company's accounting system? Show your;work!;b.;What would be the effect on the;company's overall net operating income of dropping product G91Q? Should the;product be dropped? Show your work!;132.Mr. Earl Pearl, accountant for;Margie Knall Co., Inc., has prepared the following product-line income data;The following;additional information is available;* The factory;rent of $1,500 assigned to Product C is avoidable if the product were dropped.;*;The company's total depreciation;would not be affected by dropping C.;*;Eliminating Product C will reduce;the monthly utility bill from $1,500 to $800.;*;All supervisors' salaries are;avoidable.;* If;Product C is discontinued, the maintenance department will be able to reduce;monthly expenses from $3,000 to $2,000.;*;Elimination of Product C will make;it possible to cut two persons from the administrative staff, their combined;salaries total $3,000.;Required;Prepare an;analysis showing whether Product C should be eliminated.;133.The;Hayes Company manufactures and sells several products, one of which is called a;slip differential. The company normally sells 30,000 units of the slip;differential each month. At this activity level, unit costs are;An;outside supplier has offered to produce the slip differentials for the Hayes;Company, and to ship them directly to the Hayes Company's customers. This;arrangement would permit the Hayes Company to reduce its variable selling;expenses by one third (due to elimination of freight costs). The facilities now;being used to produce the slip differentials would be idle and fixed;manufacturing overhead would continue at 60 percent of its present level. The;total fixed selling expenses of the company would be unaffected by this;decision.;Required;What is the;maximum acceptable price quotation for the slip differentials from the outside;supplier?;134.Bady Inc. makes a range of products. The;company's predetermined overhead rate is $14 per direct labor-hour, which was;calculated using the following budgeted data;Component M3 is used in one of the company's;products. The unit cost of the component according to the company's cost;accounting system is determined as follows;An;outside supplier has offered to supply component M3 for $108 each. The outside;supplier is known for quality and reliability. Assume that direct labor is a;variable cost, variable manufacturing overhead is really driven by direct;labor-hours, and total fixed manufacturing overhead would not be affected by;this decision. Bady chronically has idle capacity.;Required;Is the offer;from the outside supplier financially attractive? Why?;135.Kramer Company makes 4,000;units per year of a part called an axial tap for use in one of its products.;Data concerning the unit production costs of the axial tap follow;An;outside supplier has offered to sell Kramer Company all of the axial taps it;requires. If Kramer Company decided to discontinue making the axial taps, 40%;of the above fixed manufacturing overhead costs could be avoided. Assume that;direct labor is a variable cost.;Required;a.;Assume Kramer Company has no;alternative use for the facilities presently devoted to production of the axial;taps. If the outside supplier offers to sell the axial taps for $65 each;should Kramer Company accept the offer? Fully support your answer with;appropriate calculations.;b. Assume;that Kramer Company could use the facilities presently devoted to production of;the axial taps to expand production of another product that would yield an;additional contribution margin of $80,000 annually. What is the maximum price;Kramer Company should be willing to pay the outside supplier for axial taps?;136.Masse Corporation uses part G18 in one of its;products. The company's Accounting Department reports the following costs of;producing the 16,000 units of the part that are needed every year.;An outside supplier has offered to make the part and;sell it to the company for $28.00 each. If this offer is accepted, the;supervisor's salary and all of the variable costs, including direct labor, can;be avoided. The special equipment used to make the part was purchased many;years ago and has no salvage value or other use. The allocated general overhead;represents fixed costs of the entire company. If the outside supplier's offer;were accepted, only $22,000 of these allocated general overhead costs would be;avoided. In addition, the space used to produce part G18 could be used to make;more of one of the company's other products, generating an additional segment;margin of $22,000 per year for that product.;Required;a.;Prepare a report that shows the;effect on the company's total net operating income of buying part G18 from the;supplier rather than continuing to make it inside the company.;b.;Which alternative should the;company choose?;137.Part;E43 is used in one of Ran Corporation's products. The company's Accounting;Department reports the following costs of producing the 12,000 units of the;part that are needed every year.;An;outside supplier has offered to make the part and sell it to the company for;$14.70 each. If this offer is accepted, the supervisor's salary and all of the;variable costs, including direct labor, can be avoided. The special equipment;used to make the part was purchased many years ago and has no salvage value or;other use. The allocated general overhead represents fixed costs of the entire;company. If the outside supplier's offer were accepted, only $5,000 of these;allocated general overhead costs would be avoided.;Required;a.;Prepare a report that shows the;effect on the company's total net operating income of buying part E43 from the;supplier rather than continuing to make it inside the company.;b.;Which alternative should the;company choose?;138.Foulds Company makes 10,000 units per year of;a part it uses in the products it manufactures. The unit product cost of this;part is computed as follows;An;outside supplier has offered to sell the company all of these parts it needs;for $42.30 a unit. If the company accepts this offer, the facilities now being used;to make the part could be used to make more units of a product that is in high;demand. The additional contribution margin on this other product would be;$39,000 per year.;If;the part were purchased from the outside supplier, all of the direct labor cost;of the part would be avoided. However, $6.40 of the fixed manufacturing;overhead cost being applied to the part would continue even if the part were;purchased from the outside supplier. This fixed manufacturing overhead cost;would be applied to the company's remaining products.;Required;a.;How much of the unit product cost;of $47.90 is relevant in the decision of whether to make or buy the part?;b.;What is the net total dollar;advantage (disadvantage) of purchasing the part rather than making it?;c. What;is the maximum amount the company should be willing to pay an outside supplier;per unit for the part if the supplier commits to supplying all 10,000 units;required each year?;139.Jerston Company has an annual;plant capacity of 3,000 units. Data concerning this product are given below;The company has received a special;order for 500 units at a selling price of $45 each. Regular sales would not be;affected, and sales commissions on the 500 units would be reduced by one-third.;This special order would have no impact on total fixed costs.;Required;Determine;whether the company should accept the special order. Show all computations.;140.Nowlan Co. manufactures;and sells trophies for winners of athletic and other events. Its manufacturing;plant has the capacity to produce 11,000 trophies each month, current monthly;production is 8,800 trophies. The company normally charges $87 per trophy. Cost;data for the current level of production are shown below;The;company has just received a special one-time order for 500 trophies at $50;each. For this particular order, no variable selling and administrative costs;would be incurred. This order would also have no effect on fixed costs.;Required;Should the;company accept this special order? Why?;141.Holtrop Corporation has;received a request for a special order of 9,000 units of product Z74 for $46.50;each. The normal selling price of this product is $51.60 each, but the units;would need to be modified slightly for the customer. The normal unit product;cost of product Z74 is computed as follows;Direct;labor is a variable cost. The special order would have no effect on the;company's total fixed manufacturing overhead costs. The customer would like;some modifications made to product Z74 that would increase the variable costs;by $6.20 per unit and that would require a one-time investment of $46,000 in;special molds that would have no salvage value. This special order would have;no effect on the company's other sales. The company has ample spare capacity;for producing the special order.;Required;Determine;the effect on the company's total net operating income of accepting the special;order. Show your work!;142.Rothery Co. manufactures;and sells medals for winners of athletic and other events. Its manufacturing;plant has the capacity to produce 18,000 medals each month, current monthly;production is 17,100 medals. The company normally charges $88 per medal. Cost;data for the current level of production are shown below;The;company has just received a special one-time order for 600 medals at $73 each.;For this particular order, no variable selling and administrative costs would;be incurred. This order would also have no effect on fixed costs.;Required;Should the;company accept this special order? Why?;143.Humes Corporation makes a;range of products. The company's predetermined overhead rate is $16 per direct;labor-hour, which was calculated using the following budgeted data;Management is considering a special order for 700;units of product J45K at $64 each. The normal selling price of product J45K is;$75 and the unit product cost is determined as follows;If;the special order were accepted, normal sales of this and other products would;not be affected. The company has ample excess capacity to produce the;additional units. Assume that direct labor is a variable cost, variable;manufacturing overhead is really driven by direct labor-hours, and total fixed;manufacturing overhead would not be affected by the special order.;Required;If the special;order were accepted, what would be the impact on the company's overall profit?;144.A customer has asked Twiner Corporation to supply;5,000 units of product D05, with some modifications, for $40.20 each. The;normal selling price of this product is $52.80 each. The normal unit product;cost of product D05 is computed as follows;Direct;labor is a variable cost. The special order would have no effect on the;company's total fixed manufacturing overhead costs. The customer would like;some modifications made to product D05 that would increase the variable costs;by $3.50 per unit and that would require a one-time investment of $23,000 in;special molds that would have no salvage value. This special order would have;no effect on the company's other sales. The company has ample spare capacity;for producing the special order.;Required;Determine;the effect on the company's total net operating income of accepting the special;order. Show your work!;145.Jumonville Company produces a;single product. The cost of producing and selling a single unit of this product;at the company's normal activity level of 70,000 units per month is as follows;The normal;selling price of the product is $56.70 per unit.;An;order has been received from an overseas customer for 2,000 units to be;delivered this month at a special discounted price. This order would have no;effect on the company's normal sales and would not change the total amount of;the company's fixed costs. The variable selling and administrative expense;would be $0.70 less per unit on this order than on normal sales.;Direct;labor is a variable cost in this company.;Required;a.;Suppose there is ample idle;capacity to produce the units required by the overseas customer and the special;discounted price on the special order is $51.20 per unit. By how much would;this special order increase (decrease) the company's net operating income for;the month?;b. Suppose;the company is already operating at capacity when the special order is received;from the overseas customer. What would be the opportunity cost of each unit;delivered to the overseas customer?;c. Suppose;there is not enough idle capacity to produce all of the units for the overseas;customer and accepting the special order would require cutting back on;production of 700 units for regular customers. What would be the minimum;acceptable price per unit for the special order?;146.Block Corporation makes three products that;use the current constraint, which is a particular type of machine. Data;concerning those products appear below;Required;a. Rank;the products in order of their current profitability from the most profitable;to the least profitable. In other words, rank the products in the order in;which they should be emphasized. Show your work!;b. Assume;that sufficient constraint time is available to satisfy demand for all but the;least profitable product. Up to how much should the company be willing to pay;to acquire more of the constrained resource?;147.Redner, Inc. produces three;products. Data concerning the selling prices and unit costs of the three;products appear below;Fixed costs are;applied to the products on the basis of direct labor hours.;Demand;for the three products exceeds the company's productive capacity. The grinding;machine is the constraint, with only 2,400 minutes of grinding machine time;available this week.;Required;a.;Given the grinding machine;constraint, which product should be emphasized? Support your answer with;appropriate calculations.;b. Assuming;that there is still unfilled demand for the product that the company should;emphasize in part (a) above, up to how much should the company be willing to;pay for an additional hour of grinding machine time?;148.Glunn Company makes;three products in a single facility. These products have the following unit;product costs;Additional data;concerning these products are listed below.;The;mixing machines are potentially the constraint in the production facility. A;total of 24,200 minutes are available per month on these machines.;Direct;labor is a variable cost in this company.;Required;a.;How many minutes of mixing machine;time would be required to satisfy demand for all three products?;b.;How much of each product should be;produced to maximize net operating income? (Round off to the nearest whole;unit.);c.;Up to how much should the company;be willing to pay for one additional hour of mixing machine time if the company;has made the best use of the existing mixing machine capacity? (Round off to;the nearest whole cent.);149.Holvey;Company makes three products in a single facility. Data concerning these;products follow;The;mixing machines are potentially the constraint in the production facility. A;total of 6,300 minutes are available per month on these machines. Direct labor;is a variable cost in this company.;Required;a. How;many minutes of mixing machine time would be required to satisfy demand for all;three products?;b.;How much of each product should be;produced to maximize net operating income? (Round off to the nearest whole;unit.);c.;Up to how much should the company;be willing to pay for one additional hour of mixing machine time if the company;has made the best use of the existing mixing machine capacity? (Round off to;the nearest whole cent.);150.The constraint at Vrana Inc. is an expensive;milling machine. The three products listed below use this constrained resource.;Required;a.;Rank the products in order of;their current profitability from the most profitable to the least profitable.;In other words, rank the products in the order in which they should be;emphasized. Show your work!;b. Assume;that sufficient constraint time is available to satisfy demand for all but the;least profitable product. Up to how much should the company be willing to pay;to acquire more of the constrained resource?;151.Prevatte;Corporation purchases potatoes from farmers. The potatoes are then peeled;producing two intermediate products-peels and depeeled spuds. The peels can;then be processed further to make a cocktail of organic nutrients. And the;depeeled spuds can be processed further to make frozen french fries. A batch of;potatoes costs $45 to buy from farmers and $11 to peel in the company's plant.;The peels produced from a batch can be sold as is for animal feed for $27 or;processed further for $16 to make;the;cocktail of nutrients that are sold for $47. The depeeled spuds can be sold as;is for $38 or processed further for $27 to make frozen french fries that are;sold for $59.;Required;a. Assuming;that no other costs are involved in processing potatoes or in selling products;how much money does the company make from processing one batch of potatoes into;the cocktail of organic nutrients and frozen french fries? Show your work!;b.;Should each of the intermediate;products, peels and depeeled spuds, be sold as is or processed further into an;end product? Explain.;152.Spurrier Corporation;produces two intermediate products, A and B, from a common input. Intermediate;product A can be further processed into end product X. Intermediate product B;can be further processed into end product Y. The common input is purchased in;batches that cost $50 each and the cost of processing a batch to produce;intermediate products A and B is $15. Intermediate product A can be sold as is;for $28 or processed further for $18 to make end product X that is sold for;$43. Intermediate product B can be sold as is for $31 or processed further for;$24 to make end product Y that is sold for $68.;Required;a. Assuming;that no other costs are involved in processing potatoes or in selling products;how much money does the company make from processing one batch of the common;input into the end products X and Y? Show your work!;b.;Should each of the intermediate;products, A and B, be sold as is or processed further into an end product?;Explain.;153.Harris Corp. manufactures;three products from a common input in a joint processing operation. Joint;processing costs up to the split-off point total $200,000 per year. The company;allocates these costs to the joint products on the basis of their total sales;value at the split-off point.;Each;product may be sold at the split-off point or processed further. The additional;processing costs and sales value after further processing for each product (on;an annual basis) are;The;Further Processing Costs" consist of variable and avoidable fixed;costs.;Required;Which;product or products should be sold at the split-off point, and which product or;products should be processed further? Show computations.;154.Iaukea Company makes two products from a;common input. Joint processing costs up to the split-off point total $49,600 a;year. The company allocates these costs to the joint products on the basis of;their;total sales values at the split-off point. Each product may be sold at the;split-off point or processed further. Data concerning these products appear;below;Required;a.;What is the net monetary advantage (disadvantage);of processing Product X beyond the split-off point?;b.;What is the net monetary advantage;(disadvantage) of processing Product Y beyond the split-off point?;c.;What is the minimum amount the;company should accept for Product X if it is to be sold at the split-off point?;d. What;is the minimum amount the company should accept for Product Y if it is to be;sold at the split-off point?

 

Paper#42661 | Written in 18-Jul-2015

Price : $25
SiteLock