26. NF Toy Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $30 and NF Toy would sell it for $65. The cost to assemble the product is estimated at $21 per unit and the company believes the market would support a price of $85 on the assembled unit. What decision should NF Toy make? A) Sell before assembly, the company will be better off by $1 per unit. B) Sell before assembly, the company will be better off by $20 per unit. C) Process further, the company will be better off by $29 per unit. D) Process further, the company will be better off by $14 per unit. 27. A company has a process that results in 15,000 pounds of Product A that can be sold for $8 per pound. An alternative would be to process Product A further at a cost of $100,000 and then sell it for $14 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action? A) Process further, the company will be better off by $10,000. B) Sell now, the company will be better off by $10,000. C) Process further, the company will be better off by $90,000. D) Sell now, the company will be better off by $100,000. 28. Marcus Company gathered the following data about the three products that it produces: Present Estimated Additional Estimated Sales Product Sales Value Processing Costs if Processed Further A $12,000 $8,000 $21,000 B 14,000 5,000 18,000 C 11,000 3,000 16,000 Which of the products should not be processed further? A) Product A B) Product B C) Product C D) Products A and C 29. Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $250,000 $500,000 Accumulated Depreciation 75,000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $200,000 $150,500 If the old machine is replaced, it can be sold for $20,000. The net advantage (disadvantage) of replacing the old machine is A) $15,000 B) $20,000 C) $(5,000) D) $(50,000) 30. Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $500,000 $200,000 $65,000 $765,000 Variable expenses 325,000 140,000 58,000 523,000 Contribution margin 175,000 60,000 7,000 242,000 Fixed expenses 75,000 35,000 22,000 132,000 Net income (loss) $100,000 $ 25,000 $(15,000) $110,000 Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? A) $125,000 B) $103,000 C) $105,000 D) $140,000 31. A company can produce and sell only one of the following two products: Machine Contribution Hours Required Margin Per Unit Product 1 3 $30 Product 2 2 $25 If the company has machine capacity of 2,000 hours, what is the total contribution margin of the product it should produce to maximize net income? A) $20,000 B) $24,000 C) $25,000 D) $16,000 32. A company is considering purchasing factory equipment that costs $320,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $90,000 and annual operating expenses exclusive of depreciation expense are expected to be $38,000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is A) 32.5%. B) 3.8%. C) 7.5%. D) 16.3%. 33. A company is considering purchasing factory equipment that costs $320,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $90,000 and annual operating expenses exclusive of depreciation expense are expected to be $38,000. The straight-line method of depreciation would be used. The cash payback period on the equipment is A) 13.3 years. B) 8.0 years. C) 6.2 years. D) 3.1 years