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Black Cat Corporation manufactures a product with the following full unit costs at a volume of 4,000 units: Direct materials $200 Direct labor 80 Manufacturing

  1. Black Cat Corporation manufactures a product with the following full unit costs at a volume of 4,000 units:

    Direct materials $200
    Direct labor 80
    Manufacturing overhead (30% variable) 150
    Selling expenses (50% variable) 50
    Administrative expenses (10% variable) 80
    Total per unit $560
    A company recently approached Black Cat's management with an offer to purchase 450 units for $550 each. Black Cat currently sells the product to dealers for $800 each. Black Cat's capacity is sufficient to produce the extra 450 units. No selling expenses would be incurred on the special order. If Black Cat's management accepts the offer, profits will:

    Decrease by $120,000

    Increase by $66,800

    Increase by $97,650

    Decrease by $24,000

1 points

QUESTION 24
  1. Georgia Manufacturing Company produces products A, B, C, and D through a joint process. The joint costs amount to $250,000.

    Product UnitsProduced Sales Value at Split-Off Additional Costs of Processing Sales ValueAfter Processing
    A 1,500 $20,000 $5,000 $30,000
    B 2,500 $60,000 $6,000 $70,000
    C 2,000 $40,000 $8,000 $50,000
    D 3,000 $80,000 $12,000 $90,000
    If A is processed further, profits of A will:

    Decrease by $45,000

    Increase by $10,000

    Increase by $25,000

    Increase by $5,000

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