Assume the following (1) variable expenses - $302,000, (2) unlt sales - 10,000, (3) the contribution margin ratio - 20%, and (4) net operating income- $10,000. Given these four assumptions, which of the following is true? Multiple Choice The total fixed expenses - $60,400 The total sales - $377,500 The total contribution margin- $241,600 The variable expense ratio is 400% Assume that a company manufactures numerous component parts, one of which is called Port A. The company makes 50,000 units of Part A per year and its absorption costing system indicates that, at this volume of production, it costs $23.00 per unit to make this part: Direct materials Direct labor Variable overhead Fixed overhead Total absorption cost per unit $10.00 6.00 2.00 5.00 $23.00 The company is trying to decide between two alternatives: Alternative 1: Continue making 50,000 units of Part A annually using its existing equipment at the unit cost shown above. The equipment used to make this part does not wear out through use and it has no resale value. Alternative 2: Purchase 50,000 units of Part A from a supplier at a cost of $19.08 per unit. If the company chooses alternative 2, it believes that $180,000 of the fixed manufacturing overhead cost being allocated to Part A will continue to be incurred. What is the financial advantage or (disadvantage) of buying the parts from a supplier? Multiple Choice O $130,000 Alternative 1: Continue making 50,000 units of Part A annually using its existing equipment at the unit cost shown above. The equipment used to make this part does not wear out through use and it has no resale value. Alternative 2: Purchase 50,000 units of Part A from a supplier at a cost of $19.08 per unit. If the company chooses alternative 2, it believes that $180,000 of the fixed manufacturing overhead cost being allocated to Part A will continue to be incurred. What is the financial advantage or (disadvantage) of buying the parts from a supplier? Multiple Choice $130,000 O $(130,000) $(16,000) $16,000 Assume the following information: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $300,000 120,000 180,000 94,000 $ 86,000 Per Unit $40 16 $24 If the variable expenses increase by $1 per unit, the advertising expenditures increase by $15,000, and unit sales increase by 5%, then the best of estimate of the new net operating income is: 5 Multiple Choice $63,400 O , $72525 $70,525. If the variable expenses increase by $1 per unit, the advertising expenditures increase by $15,000, and unit sales increase by 5%, then the best of estimate of the new net operating income is: Multiple Choice $63,400 $72,125 $70,525. $86,375
