Question
Barrus Corporation makes 47,000 motors to be used In the production of its power lawn mowers, the average cost per motor at this level of
Barrus Corporation makes 47,000 motors to be used In the production of its power lawn mowers, the average cost per motor at this level of activity is as follows:
Direct Materials $10.60
Direct Labor $9.60
Variable M O $4.00
Fixed M O$4.95
The motor has recently become available from an outside supplier for $27.25 per month. If Barrus decides not to make the motors, none of the fixed Manufacturing overhead would be avoidable and there would be no other use for the facilities. If Barrus decides continue making the motor how much higher or lower will the company's net operating income be than if the motors are purchased from the outside supplier? Assume that direct labor is a variable cost in the company . $89,300 lower $331,350 higher $143,350 higher $232,650 higher
Gwinnett Barbecue Sauce corporation maufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 16,000 cases of sauce each year but, is currently only manufacturing and selling 15,000. The following costs relate to annual operations at 15,000 cases:
total cost
Variable manufacturing overhead $350,000
Fixed manufacturing cost $57,000
Variable selling and Admin cost$60,000
Fixed selling and Admin cost $39,000
Gwinnett normally sells its sauce for $50 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1,000 cases of sauce but only if they can get the sauce for $25 per case. This special order would not effect regular sales or total fixed costs or variable costs per unit, If this special order is accepted, Gwinnett's profits for the year will:
increase by $625 decrease by $1,000 decrease by $15,000 decrease by $11,000
Lusk corporation produces and sells 16,000 units of product X each month. The selling price of product X is $30 per unit, and variable expenses are $24 per unit, A study has been made concerning whether product X should be discontinued. The study shows that $70,000 of the $110.000 in fixed expenses charge to product X would not be avoidable even if the product was discontinued. If product X is discontinued the company's overall net operating income would:
decrease by $56,000 per month increase by $14,000 per month increase by $54,000 a month decrease by $54,000 a month
Nesmith corporation is considering two alternatives: A and B costs associated with the alternatives are listed below
Alternative A Alternative B
Materials Costs $45,000$61,000
Processing Costs $51,000 $51,000
Equipment rental$12,000$29,000
Occupancy costs $20,000$31,000
What is the differential cost of alternative B over A including all of the relevant costs?
$44,000 $172,000 $128,000 $153,000
Tawstir corporation has 400 obsolete personal computers that are carried in inventory at a total cost of $576,000. If these computers are upgraded at a total cost of $130,000, they can be sold for a total of $190,000. As an alternative, the computers can be sold in their present condition for $40,000 . What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?
$590,000 disadvantage $150,000 advantage $60,000 advantage $20,000 advantage
The management of Kabanuck corp is considering dropping product V41B. Data from the company's accounting system appears below:
Sales $920,000
Variable exp $399,000
F M E$334,000
F S A E$241,000
The fixed expenses of he community are fully allocated to products in the company's accounting system. Further investigation has revealed that $201,000 of the fixed manufacturing expenses and $112,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued .
According to the company's accounting system, what is the net operating income earned by product V41B? Include all costs in this calculation-whether relevant or not.
$54,000 $(521,000) $(54,000) $521,000
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