5. St. Augustine Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: O 100 100 Mwen Labor Depreciation Equipment Collowed for Adrice Allocated Portion of Overhead 100 12000 LS 1000 Which of these amounts is relevant for the selection of one contract over another? A. Contract revenue and cost of materials B. Materials, consulting advice and allocated overhead C. Cost of consulting advice and allocated overhead D. Contract revenue and labor costs 6. Vargas Industries makes a product that sells for $25 a unit. The product has a $5 per unit variable cost and total fixed costs of $9,000. At budgeted sales of 1,000 units, the margin of safety ratio is: A. 45%. B. 55%. C. 64% D. None of these. 7. Serious Safety Products currently outsources an electrical switch that is a component in its sprinkler systems. The switches are purchased for S20 each. The company is considering making the switches internally and has conducted a study to determine the costs involved. The costs below are projected annual production costs: Last learl start eat Umat Beve heart Ustrerad och level com per Product very 35.000 130.000 Assume that the company needs 10,000 of the switches, which would be produced in two batches. Assume also that the company will still be operating within the relevant range. If Serious Safety decides to make the parts under these conditions, the total relevant costs will be: A. $127,500 B. $102,500. C. $107,500 D. $122,500. 8. The margin of safety can be defined as the: A. Excess of budgeted sales over break-even sales divided by budgeted sales. B. Excess of budgeted sales over net income divided by budgeted sales. C. Excess of budgeted sales over fixed costs divided by budgeted sales. D. Excess of budgeted sales over variable costs divided by budgeted sales. 5. St. Augustine Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: O 100 100 Mwen Labor Depreciation Equipment Collowed for Adrice Allocated Portion of Overhead 100 12000 LS 1000 Which of these amounts is relevant for the selection of one contract over another? A. Contract revenue and cost of materials B. Materials, consulting advice and allocated overhead C. Cost of consulting advice and allocated overhead D. Contract revenue and labor costs 6. Vargas Industries makes a product that sells for $25 a unit. The product has a $5 per unit variable cost and total fixed costs of $9,000. At budgeted sales of 1,000 units, the margin of safety ratio is: A. 45%. B. 55%. C. 64% D. None of these. 7. Serious Safety Products currently outsources an electrical switch that is a component in its sprinkler systems. The switches are purchased for S20 each. The company is considering making the switches internally and has conducted a study to determine the costs involved. The costs below are projected annual production costs: Last learl start eat Umat Beve heart Ustrerad och level com per Product very 35.000 130.000 Assume that the company needs 10,000 of the switches, which would be produced in two batches. Assume also that the company will still be operating within the relevant range. If Serious Safety decides to make the parts under these conditions, the total relevant costs will be: A. $127,500 B. $102,500. C. $107,500 D. $122,500. 8. The margin of safety can be defined as the: A. Excess of budgeted sales over break-even sales divided by budgeted sales. B. Excess of budgeted sales over net income divided by budgeted sales. C. Excess of budgeted sales over fixed costs divided by budgeted sales. D. Excess of budgeted sales over variable costs divided by budgeted sales
