9 A company paid $200,000 ten years ago for a specialized machine that has no salvage value and is being depreciated at the rate of $10,000 per year. The company is considering using the machine in a new project that will have incremental revenues of $28,000 per year and annual cash expenses of $20,000. In analyzing the new project, the $20,000 of annual cash expenses is an example of a(n): Multiple Choice Fixed costs. O Out-of-pocket costs. o Opportunity costs. Variable costs. Sunk costs. An individual was evaluating alternative courses of action related to work and college. The individual could continue to work full-time and attend school part-time at night (it would take 10 years to graduate). Or the individual could resign and attend school full-time (and graduate in 5 years). If this individual decides to resign and go to college full-time, what are the wages lost, by not working, called? 10 Multiple Choice Incremental costs. O Variable costs. O Opportunity costs. O O Sunk costs. C Out-of-pocket costs. 11 A buyer from another country offered to purchase 10,000 units of product for $ 4.50 per unit. The normal selling price is $5.00 per unit. The company's regular variable costs of $ 2.75 per unit would not change, however overall fixed costs would increase by $10,000 if his order is accepted. How much will net income increase if this special order accepted? Multiple Choice $ 18,500. O $ 17,500. 0 $ 12,500. $ 27,500 O $ 7,500 A company can produce a unit of product for the following costs: 12 Direct material Direct labor Overhead Total costs per unit $ 7.10 23.10 35.50 $65.70 X 01:18:20 An outside supplier offers to provide the company with all the units it needs at $ 59.05 per unit. If the company buys from the supplier, overhead costs will be reduced by 70%. Fixed costs of $ 250,000 would not change under either alternative. Should the company continue to make the units or outsource them? Multiple Choice o Make - cost to make $ 55.05; outsource cost $59.05. Outsource - cost to make $ 65.70; outsource cost $ 59.05. Make - cost to make $ 40.85: outsource cost $ 59.05. Outsource-cost to make $ 62.50: outsource cost $ 59.05. Make - cost to make $ 10.65; outsource cost $59.05. 13 A company produced 20,000 units of product that were slightly defective. The cost of making this product was $ 45 per unit. These units cannot be sold at the regular sales price of $ 75. The company has two alternatives: 1) the units can be sold to a wholesaler for $ 55 each or 2) they can be reworked at a cost of $ 325,000 and then sold for the regular selling price. Should the company sell the units as is or rework and sell them? Multiple Choice Sell as scrap - rework income $ 975,000; scrap income $ 1,100,000. Rework - rework income $1,225,000; scrap income $ 1,100,000, O Sell as scrap - rework income $ 900,000; scrap income $ 1,100,000. Rework - rework income $1,500,000; scrap income $ 1,100,000. Rework - rework income $1,175,000; scrap income $ 1,100,000. 14 A company manufactures a hamster food product called Green Health. The company currently has 40,000 bags of Green Health on hand. The variable production costs per bag are $12.50 and total fixed costs are $ 75,000. The hamster food can be sold as it is for $ 20.00 per bag or be processed further into Premium Green and Green Deluxe at an additional cost. The additional processing will yield 35,000 bags of Premium Green and 10,000 bags of Green Deluxe, which can be sold for $ 18 and $ 16 per bag, respectively. Assuming the product is processed further, how much would net income change compared to selling the product in its current state? Multiple Choice $ 10,000 decrease, $ 65,000 increase. O O $ 85,000 increase. $ 60,000 decrease. . $ 225,000 decrease. A company expects its two subsidiaries to have the following net income/loss for the next year. 15 Sales Avoidable Expenses Unavoidable Expenses Net Income (loss) Subsidiary A $ 58,000 25,000 5,000 Subsidiary B $ 27,000 38.000 8,000 Total $ 85,000 63,000 13,000 $ 28,000 $ (19,000) $ 9,000 If the company decides to eliminate Subsidiary B, what will be the company's projected net income/loss for the next year? Multiple Choice $ 20,000 net income. $ 10,000 net loss. o $ 5,000 net loss. $ 5,000 net income. O $ 10,000 net income