56 Assume a company is considering adding a new product line with the following estimated cost and revenue data Annual sales 6,000 units Selling price per unit $ 180 Variable manufacturing costs per unit $ 140 Variable selling costs per unit $ 15 Incremental fixed manufacturing costs $ 65,000 per year Incremental fixed selling costs $ 40,000 per year Allocated common fixed administrative costs $ 45,000 per year If the new product line is added, the company expects that it will increase the sales of complementary products, thereby generating $30,500 in incremental contribution margin from those products What is the financial advantage (disadvantage) of adding the new product line Multiple Choice $75,500 $30,500 $45,000 $115,500 57 Assume the following budgeted information for a merchandising company Budgeted sales (all on credit) for November, December, and January are $251,000, $221,000, and $212,000, respectively Cash collections of credit sales are expected to be 75 in the month of sale and 25 in the month following the sale The cost of goods sold is always 70 of sales Each months ending inventory equals 20 of next months cost of goods sold 30 of each months merchandise purchases are paid in the current month and the remainder is paid in the following month Monthly selling and administrative expenses that are paid in cash in the month incurred total $26,500 Monthly depreciation expense is $26,000 The expected cash collections from customers in December are Multiple Choice $218,750 $248,750 $233,060 $228,500 58 Assume the following (1) selling price per unit $25, (2) variable expense per unit $13, (3) the total fixed expenses $20,000, and (4) net operating income $17,800 Given these four assumptions, unit sales must be Multiple Choice 3,780 units 1,200 units 2,378 units 3,150 units 59 Assume that a company expects to produce 11,400, 12,400, and 14,400 units of finished goods in January, February, and March, respectively Each unit of finished goods requires 3 pounds of raw material and each pound of raw material costs $4 50 The company always maintains an ending raw materials inventory equal to 20 of next months production needs What is the amount of expected raw materials purchases for February Multiple Choice $134,400 $172,800 $169,200 $122,520 60 Assume that the actual amount of one of a companys variable expenses was $45,198 The companys planned level of activity was 19,000 machine hours, and its actual level of activity was 18,325 machine hours The spending variance for this particular expense was $9,114 favorable The cost formula per machine hour for this expense is Multiple Choice $2 96 $1 94 $2 90 $1 98

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56. Assume a company is considering adding a new product line with the following estimated cost and revenue data: Annual sales 6,000 units Selling price

56.

Assume a company is considering adding a new product line with the following estimated cost and revenue data:


Annual sales		6,000	units
Selling price per unit	$	180
Variable manufacturing costs per unit	$	140
Variable selling costs per unit	$	15
Incremental fixed manufacturing costs	$	65,000	per year
Incremental fixed selling costs	$	40,000	per year
Allocated common fixed administrative costs	$	45,000	per year

If the new product line is added, the company expects that it will increase the sales of complementary products, thereby generating $30,500 in incremental contribution margin from those products. What is the financial advantage (disadvantage) of adding the new product line?

Multiple Choice

$75,500
$30,500
$45,000
$115,500

57.

Assume the following budgeted information for a merchandising company:

Budgeted sales (all on credit) for November, December, and January are $251,000, $221,000, and $212,000, respectively.
Cash collections of credit sales are expected to be 75% in the month of sale and 25% in the month following the sale.
The cost of goods sold is always 70% of sales.
Each months ending inventory equals 20% of next months cost of goods sold.
30% of each months merchandise purchases are paid in the current month and the remainder is paid in the following month.
Monthly selling and administrative expenses that are paid in cash in the month incurred total $26,500.
Monthly depreciation expense is $26,000.

The expected cash collections from customers in December are:

Multiple Choice

$218,750.
$248,750.
$233,060.
$228,500.

58.

Assume the following (1) selling price per unit = $25, (2) variable expense per unit = $13, (3) the total fixed expenses = $20,000, and (4) net operating income = $17,800. Given these four assumptions, unit sales must be:

Multiple Choice

3,780 units.
1,200 units.
2,378 units.
3,150 units.

59.

Assume that a company expects to produce 11,400, 12,400, and 14,400 units of finished goods in January, February, and March, respectively. Each unit of finished goods requires 3 pounds of raw material and each pound of raw material costs $4.50. The company always maintains an ending raw materials inventory equal to 20% of next months production needs. What is the amount of expected raw materials purchases for February?

Multiple Choice

$134,400
$172,800
$169,200
$122,520

60.

Assume that the actual amount of one of a companys variable expenses was $45,198. The companys planned level of activity was 19,000 machine-hours, and its actual level of activity was 18,325 machine-hours. The spending variance for this particular expense was $9,114 favorable. The cost formula per machine-hour for this expense is:

Multiple Choice