14.)

Hordel Company needs to determine a markup for a new product. Hordel expects to sell 5,000 units and wants a target profit of $114 per unit. Additional information is as follows:

Variable Costs per Unit		Fixed Costs (total)
Direct materials	$ 35	Overhead	$ 50,960
Direct labor	56	General and administrative	39,960
Overhead	36
General and administrative	37

Using the variable cost method, what markup percentage to variable cost should be used?

Multiple Choice

• 64.1%

• 82.2%

• 78.1%

• 75.7%

• 80.6%

15.)

Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $98,000 as shown below.

Segment Income (Loss)
Sales	$ 1,123,000
Variable costs	988,000
Contribution margin	135,000
Fixed costs	233,000
Income (loss)	$ (98,000)

If the Windows division is dropped, all of its variable costs are avoidable, and $151,450 of its fixed costs are avoidable. The impact on Gions operating income from eliminating this business segment would be:

Multiple Choice

• $15,650 decrease

• $16,450 increase

• $151,450 decrease

• $151,450 increase

• $16,450 decrease

16.)

Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $58,000 for the past year as shown below.

Segment Income (Loss)
Sales	$ 1,130,000
Variable costs	842,000
Contribution margin	288,000
Fixed costs	346,000
Income (loss)	$ (58,000)

If the kitchen division is dropped, all $842,000 of its variable costs are avoidable, and $207,600 of its fixed costs are avoidable. The impact on Valdezs income from eliminating this business segment would be:

Multiple Choice

• $80,400 decrease

• $288,000 increase

• $297,600 decrease

• $80,400 increase

• $288,000 decrease