Question
*Amazon has been concerned for some time with the financial performance of its product I11S and has considered discontinuing it on several occasions. Data from
*Amazon has been concerned for some time with the financial performance of its product I11S and has considered discontinuing it on several occasions. Data from the company's accounting system appear below:
Sales | $760,000 |
Variable Expenses | $350,000 |
Fixed Manufacturing Expenses | $258,000 |
Fixed Selling and Administrative Expenses | $198,000 |
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $110,000 of the fixed manufacturing expenses and $90,000 of the fixed selling and administrative expenses are avoidable if product I11S is discontinued. What would be the effect on the company's overall net operating income if product I11S were dropped?
a.
$210,000.00
b.
$20,000.00
c.
$300,000.00
d.
$320,000.00
*Amazon., processes sugar cane that it purchases from farmers. Sugar cane is processed in batches. A batch of sugar cane costs $60 to buy from farmers and $13 to crush in the company's plant. Two intermediate products, cane fiber and cane juice, emerge from the crushing process. The cane fiber can be sold as is for $29 or processed further for $13 to make the end product industrial fiber that is sold for $61. The cane juice can be sold as is for $40 or processed further for $28 to make the end product molasses that is sold for $67. What is the financial advantage (disadvantage) for the company from processing one batch of sugar cane into the end products industrial fiber and molasses?
Select one:
a.
($114) per batch
b.
$18 per batch
c.
$14 per batch
d.
($4) per batch
*Amazon uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with total cost and activity as follows: Total Activity
Activity Cost Pools | Total Cost | Product A | Product B | Total |
Activity 1 | $16,660 | 600 | 100 | 700 |
Activity 2 | $18,450 | 1,100 | 700 | 1,800 |
Activity 3 | $9,731 | 60 | 160 | 220 |
The activity rate for Activity 2 is closest to:
Select one:
a.
$24.91
b.
$26.36
c.
$10.25
d.
$16.77
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started