17 Jaybird Company operates in a highly competitive market where the market price for its product is $50 per unit Jaybird desires a $15 profit per unit Jaybird expects to sell 5,000 units Additional information is as follows Variable product cost per unit $ 15 Variable administrative cost per unit 10 Total fixed overhead 45,000 Total fixed administrative 18,000 To achieve the target cost per unit, Jaybird must reduce total expenses by how much Multiple Choice $14,500 $3,500 $23,000 $20,000 $13,000 18 Riener Hospital has an x ray machine with a book value of $60,000 and a remaining useful life of three years At the end of the three years the equipment will have a zero salvage value The market value of the equipment is currently $32,000 Riener can purchase a new machine for $145,000 and receive $28,000 in return for trading in its old machine The new machine will reduce variable manufacturing costs by $27,000 per year over the three year life of the new machine The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is Multiple Choice $22,000 decrease $76,000 increase $18,000 decrease $52,000 increase $22,000 increase 19 Ahngram Corp has 1,000 carton of oranges that cost $10 per carton in direct costs and $16 50 per carton in indirect costs and sold for $30 per carton The oranges can be processed further into orange juice at an additional cost of $12 50 and sold at a price of $46 The incremental income (loss) from processing the oranges into orange juice would be Multiple Choice $30,500 $22,500 ($30,500) $33,500 $23,500 20 Paxton Company can produce a component of its product that incurs the following costs per unit direct materials, $10 direct labor, $14, variable overhead $3 and fixed overhead, $8 An outside supplier has offered to sell the product to Paxton for $32 Compute the net incremental cost or savings of buying the component Multiple Choice $5 00 savings per unit $3 00 cost per unit $0 cost or savings per unit $5 00 cost per unit $3 00 savings per unit

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17 - Jaybird Company operates in a highly competitive market where the market price for its product is $50 per unit. Jaybird desires a $15

17 - Jaybird Company operates in a highly competitive market where the market price for its product is $50 per unit. Jaybird desires a $15 profit per unit. Jaybird expects to sell 5,000 units. Additional information is as follows:


Variable product cost per unit	$	15
Variable administrative cost per unit		10
Total fixed overhead		45,000
Total fixed administrative		18,000

To achieve the target cost per unit, Jaybird must reduce total expenses by how much?

Multiple Choice

$14,500
$3,500
$23,000
$20,000
$13,000

18 - Riener Hospital has an x-ray machine with a book value of $60,000 and a remaining useful life of three years. At the end of the three years the equipment will have a zero salvage value. The market value of the equipment is currently $32,000. Riener can purchase a new machine for $145,000 and receive $28,000 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $27,000 per year over the three-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is:

Multiple Choice
$22,000 decrease
$76,000 increase
$18,000 decrease
$52,000 increase
$22,000 increase

19 - Ahngram Corp. has 1,000 carton of oranges that cost $10 per carton in direct costs and $16.50 per carton in indirect costs and sold for $30 per carton. The oranges can be processed further into orange juice at an additional cost of $12.50 and sold at a price of $46. The incremental income (loss) from processing the oranges into orange juice would be:

Multiple Choice
$30,500.
$22,500.
($30,500).
$33,500.
$23,500.

20 - Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10; direct labor, $14, variable overhead $3 and fixed overhead, $8. An outside supplier has offered to sell the product to Paxton for $32. Compute the net incremental cost or savings of buying the component.

Multiple Choice
$5.00 savings per unit.
$3.00 cost per unit.
$0 cost or savings per unit.
$5.00 cost per unit.
$3.00 savings per unit.