Question
13. unland Company incurs the following costs to produce 11400 units of a subcomponent: Direct materials $9576 Direct labor 12882 Variable overhead 14364 Fixed overhead
13. unland Company incurs the following costs to produce 11400 units of a subcomponent:
Direct materials | $9576 |
Direct labor | 12882 |
Variable overhead | 14364 |
Fixed overhead | 16200 |
An outside supplier has offered to sell Sunland the subcomponent for $2.85 a unit. If Sunland accepts the offer, by how much will net income increase (decrease)?
$(3306)
$4332
$20532
$(10032)
14. Coronado Company gathered the following data about the three products that it produces:
Product | Present Sales Value | Estimated Additional Processing Costs | Estimated Sales if Processed Further | ||||
A | $14000 | $9000 | $24000 | ||||
B | 16000 | 6000 | 21000 | ||||
C | 13000 | 4000 | 19000 |
Which of the products should not be processed further?
Product B
Products A and C
Product A
Product C
15.Bonita Industries produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period:
Product | Sales Value at Split-off | Additional Variable Costs | Sales Value after Further Processing | |
Green lumber | $163600 | $25400 | $189000 | |
Rough lumber | 128000 | 28900 | 179200 | |
Sawdust | 108000 | 20700 | 136800 |
The additional profit that would result from processing rough lumber further is
$22300.
$99100.
$150300.
$51200.
16.Marigold Bunyon Lumber Co. produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period:
Product | Sales Value at Split-off | Additional Variable Costs | Sales Value after Further Processing | |
Green lumber | $160600 | $24800 | $185400 | |
Rough lumber | 125000 | 28300 | 175000 | |
Sawdust | 105000 | 20100 | 133200 |
Which products should be processed further?
Green lumber and rough lumber.
Green lumber and sawdust.
Rough lumber and sawdust.
All three products.
17. heffield Corp. produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period:
Product | Sales Value at Split-off | Additional Variable Costs | Sales Value after Further Processing |
Green lumber | $159600 | $24000 | $178000 |
Rough lumber | 120000 | 27300 | 168000 |
Sawdust | 100000 | 19100 | 127200 |
What is the increase in profit if the appropriate products are processed further?
$248800
$28800
$93600
$23200
18. Fido Company has three segments, one of which is unprofitable. The Duchess Doggy Biscuit segment had the following results last period:
Sales | $1,040,000 |
Variable expenses | (640,000) |
Contribution margin | 400,000 |
Fixed expenses | (540,000) |
Net loss | $(140,000) |
If the Duchess Doggy Biscuit segment is eliminated, 50% of the fixed expenses can also be eliminated, the other 50% will be reallocated. What will happen to company net income if this product line is eliminated?
Decrease by $130,000.
Decrease by $400,000.
Increase by $140,000.
Increase by $270,000.
19. Bergeron Company is considering replacing equipment with a cost of $30,000, accumulated depreciation of $20,000, and a 2 year remaining useful life. The new equipment has a cost of $42,000 and a useful life of 6 years. The seller has offered a trade-in allowance of $7,500. The new equipment is much more efficient. Bergeron projects cost savings of $10,000 per year if the new equipment is purchased. Which of the following is not relevant in deciding whether to retain or replace equipment?
Trade-in allowance of existing equipment.
Book value of existing equipment.
Cost of new equipment.
Cost savings.
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