2)

Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 623,000 units, estimated beginning inventory is 104,000 units, and desired ending inventory is 82,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A 0.50 lb. per unit @ $0.59 per pound Material B 1.00 lb. per unit @ $2.08 per pound Material C 1.20 lb. per unit @ $0.89 per pound The dollar amount of material A used in production during the year is

a.$177,295

b.$1,250,080

c.$183,785

d.$641,868

3)

The condensed income statement for a Fletcher Inc. for the past year is as follows:

	Product
	F	G	H	Total
Sales	$300,000	$210,000	$340,000	$850,000
Costs:
Variable costs	$(180,000)	$(180,000)	$(220,000)	$(590,000)
Fixed costs	(50,000)	(50,000)	(40,000)	(140,000)
Total costs	$(230,000)	$(230,000)	$(260,000)	$(730,000)
Income (loss)	$70,000	$(20,000)	$80,000	$120,000

Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. The amount of change in profit for the current year that will result from the discontinuance of Product G is a

a.$30,000 decrease

b.$20,000 decrease

c.$20,000 increase

d.$30,000 increase

4)

Mighty Safe Fire Alarm is currently buying 62,000 motherboards from MotherBoard, Inc., at a price of $65 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $28 per unit; direct labor, $8 per unit; and variable factory overhead, $17 per unit. Fixed costs for the plant would increase by $87,000. Which option should be selected and why?

a.make, $657,200 increase in profits

b.make, $744,000 increase in profits

c.buy, $87,000 increase in profits

d.buy, $657,200 increase in profits