1.Division 1 has the following information: Sales is $200,000; Variable costs are $130,000; Fixed costs are $100,000; leaving a loss of $30,000. If we drop
1.Division 1 has the following information: Sales is $200,000; Variable costs are $130,000; Fixed costs are $100,000; leaving a loss of $30,000. If we drop division 1, 60% of the fixed costs could be saved. Should we drop division 1?
| a. | Yes, overall company net income would go up by $30,000 |
| b. | No, overall company net income would go down by $30,000 |
| c. | Yes, overall company net income would go up by $10,000 |
| d. | No, overall company net income would go down by $10,000 |
2.Should we accept a special order for 1,000 at a selling price of $40 if our variable costs are $15 per unit and there would be an additional fixed costs of $12,000?
| a. | Yes, net income would go up by $25,000 |
| b. | No, net income would go down by $25,000 |
| c. | No, net income would go down by $13,000 |
| d. | Yes, net income would go up by $13,000 |
3.Given the following information, determine the product cost of one unit: Direct Materials = $60; Direct labor = $10; Apply Overhead based on $2 per Direct Labor hour; Direct labor hours is 4 hours per unit.
