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1. Robin Company currently produces 8,000 units o...

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1. Robin Company currently produces 8,000 units of part B13. Current costs for part B13 are as follows: Direct materials $12 Direct labor 8 Factory rent 7 Administrative 10 General factory overhead 7 Total $45 If the company decides to buy part B13, 50% of the administrative costs would be avoided. All of the Robin Company items, including part B13, are manufactured in the same rented production facility. The company has an offer from a wholesaler that wishes to sell the part to Robin for $31 per unit. What effect will occur if the company decides to accept the offer? Answer A. The cost for this part will be the same. B. The cost for this part will increase by $6 per unit. C. The cost for this part will decrease by $10 per unit. D. The cost for this part will increase by $5 per unit. 2. Kansas Industries makes soy oil and soy meal from soy in a joint process. The soy oil can be further processed into margarine, and the soy meal can be further processed into corn muffin mix. The joint cost incurred to process the soy to the split off point was $140,000. Information on the quantities, value, and further processing costs for the joint product appears below: Sales Value Estimated Further Sales Value Quantity At Split Off Processing Cost After Processing Soy Oil 800,000 lbs. $0.30/lb. $0.15/lb. $0.60/lb. Soy Meal 1,500,000 lbs. $0.15/lb. $0.45/lb. $0.55/lb. Assume that the joint cost is allocated to the products based on the sales value at split off of each product. How much joint cost should be assigned to the soy oil? Answer A. $93,333 B. $72,258 C. $73,043 D. $48,696 3. The following are production and cost data for two products, buckets and pails. Buckets Pails Contribution margin per unit $450 $280 Machine set-ups needed per unit 20 14 The company can only perform 14,000 set-ups each period yet there is unlimited demand for each product. What is the maximum contribution margin for the year? Answer A. $35,000 B. $595,000 C. $280,000 D. $315,000 4. Rally Shoe Company is trying to decide whether or not to continue making bowling shoes. The following information is available for the segments. Bowling Shoes Athletic Shoes Boots Sales $120,000 $420,000 $360,000 Variable Costs 64,000 220,000 140,000 Contribution Margin 56,000 200,000 220,000 Direct Fixed Costs 45,000 70,000 90,000 Allocated Common Fixed costs 20,000 70,000 60,000 Net Income ($9,000) $60,000 $70,000 Assume that boots normally sell for $90 per pair. An exporter has approached Rally about buying 1,000 pairs of boots for a one-time export deal for $81 per pair. $3.00 per unit of the normal variable cost could be avoided on this sale, but Rally would have to pay a fixed cost $4,000 to have the boots shipped. Rally has capacity to produce this order, and no regular sales will be affected. If Rally accepts this order Answer A. More information is needed to answer. B. profits will increase by $45,000. C. profits will increase by $49,000. D. profits will increase by $42,000. 5. Kansas Industries makes soy oil and soy meal from soy in a joint process. The soy oil can be further processed into margarine, and the soy meal can be further processed into corn muffin mix. The joint cost incurred to process the soy to the split off point was $140,000. Information on the quantities, value, and further processing costs for the joint product appears below: Sales Value Estimated Further Sales Value Quantity At Split Off Processing Cost After Processing Soy Oil 800,000 lbs. $0.30/lb. $0.15/lb. $0.60/lb. Soy Meal 1,500,000 lbs. $0.15/lb. $0.45/lb. $0.55/lb. Assume that the joint cost is assigned using physical units and that soy oil is assigned $48,696 of joint cost and soy meal is assigned $91,304 of joint cost. Which products should be processed further? Answer A. Both B. Neither C. Soy meal D. Soy oil 6. Citrus Company sells its single product for $60 per unit. Unit product costs are as follows: Direct materials $20 Direct labor 20 Manufacturing overhead 4 Total $44 A special order to purchase 10,000 units was recently received. There is enough capacity to fill the order. Filling this order would not disrupt current operations. The Citrus Company would incur an additional $5 per unit for additional labor costs due to a slight modification the buyer wants made to the original product. One-fourth of the manufacturing overhead costs are fixed and would be incurred no matter how many units are produced. In negotiating a price, how much is the minimum acceptable selling price? Answer A. $48 B. $60 C. $44 D. $45 7. The following are production and cost data for two products, A and B. Product A Product B Contribution margin per unit $450 $340 Machine set-ups needed per unit 25 20 The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the maximum contribution margin for the year? Answer A. $420,000 B. $18,050,000 C. $204,000 D. $216,000 8. Rally Shoe Company is trying to decide whether or not to continue making bowling shoes. The following information is available for the segments. Bowling Shoes Athletic Shoes Boots Sales $120,000 $420,000 $360,000 Variable Costs 64,000 220,000 140,000 Contribution Margin 56,000 200,000 220,000 Direct Fixed Costs 45,000 70,000 90,000 Allocated Common Fixed costs 20,000 70,000 60,000 Net Income ($9,000) $60,000 $70,000 On what basis have the common fixed costs been allocated to the segments? Answer A. Not enough information to answer. B. Number of employees. C. Sales. D. Number of shoes sold. 10. Rally Shoe Company is trying to decide whether or not to continue making bowling shoes. The following information is available for the segments. Bowling Shoes Athletic Shoes Boots Sales $120,000 $420,000 $360,000 Variable Costs 64,000 220,000 140,000 Contribution Margin 56,000 200,000 220,000 Direct Fixed Costs 45,000 70,000 90,000 Allocated Common Fixed costs 20,000 70,000 60,000 Net Income ($9,000) $60,000 $70,000 If bowling shoes are dropped, overall net income would Answer A. Decrease by $56,000. B. Increase by $9,000. C. Decrease by $11,000. D. Increase by $56,000

 

Paper#8742 | Written in 18-Jul-2015

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