Blossom Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. YGo has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,000,000 Y-Go undergarments a year. The per unit and total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials $1.90 $1.900.000 Direct labor 0.40 400.000 Variable manufacturing overhead 0.95 950.000 Fixed manufacturing overhead 1.40 1.400.000 Variable selling expenses 0.30 300,000 Totals $4.95 $4,950,000 The US. Army has approached Blossom Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead cost. In addition, the Army has agreed to pay an additional $0.95 per undergarment to cover all other costs and provide a prot. Presently, Blossom Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. Fiber accepts the Army's offer; it will not incur any variable selling expenses related to this order. Prepare an incremental analysis for the Elossom Fiber. (Enter negative amounts using eithera negative sign preceding the number eg. -45 or parentheses ea. {45).} Net Income Reject Accept Increase Order Order (Decrease) Revenues $ $ $ Variable costs: Direct materials Direct labor Variable overhead Total variable costs Net income $ $ $ Which of the following is a true statement about cost behavior in incremental analysis? a. Fixed cost will not change between alternative courses of action b. Fixed cost may change between alternative courses of action c. Variable cost will change between alternative courses of action d. Both b and c .0093? Qpcrpa p.959: .0090? It costs Sheridan Company $12 of variable and $5 of xed costs to produce one scale which normally sells for $39. A foreign wholesaler offers to purchase 3900 scales at $15 each. Garner would incur special shipping cost of $1 per scale if the order were accepted. Sheridan has sufficient unused capacity to produce the 3900 scales. If the special order is accepted, what will be the effect on net income? $7800 increase $7800 decrease $27300 decrease $58500 increase Marigold Corp. incurs the following costs to produce 8500 units of a subcomponent: Direct materials $9000, Direct labor 12750, Variable overhead 12800, Fixed overhead 18000, $(13700) $(6750) $(14500) $19700 Waterway Industries incurs the following costs to produce 10500 units of a subcomponent: Direct materials $8000, Direct labor 11500, Variable overhead 12000, Fixed overhead 18000. An outside supplier has offered to sell Waterway the subcomponent for $2.30 a unit. No fixed overhead costs are avoidable. IfWaterway accepts the offer, it could use the production capacity to produce another product that would generate an additional income of $3600. The increase (decrease) in net income from accepting the offer would be 53750 $10950 $(3750) $(3600) Concord Corporation is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $22, and Concord would sell it for $50. The cost to assemble the product is estimated at $14 per unit and the company believes the market would support a price of $62 on the assembled unit. What decision should Concord make and why? Sell before assembly because the company will be better off by $2 per unit Sell before assembly because the company will be better off by $12 per unit Process further because the company will be better off by $20 per unit Process further because the company will be better off by $14 per unit Coronado Industries has an inventory on hand that costs $15900. Its scrap value is $25000. The inventory could be sold for $75000 if manufactured further at an additional cost of 515800. What should Coronado do? a. Selling the inventory for $25000 scrap value b. Dispose of the inventory to avoid any further decline in value c. Hold the inventory at $15900 d Manufacture further and sell it for $75000 Bonita Industries is considering the replacemet of a piece of equipment with a newer model. The following data has been collected. If the old equipment is replaced now, it can be sold for $300000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The net advantage (disadvantage) of replacing the old equipment with the new equipment is: Old Equipment New Equipment Purchase price $230000 $376000 Accumulated depreciation 118000 -0 - Annual operating costs 300000 240000 A. $30000 B. $(46000) C. $(70000) D. $118000 A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost? a. The book value of the old equipment b. Depreciation expenses of the old equipment c. The loss on disposal of the old equipment d. The current disposal price of the old equipment A segment has the following data: Sales $640000; Variable expenses $324000; fixed expenses 550000. What will be the incremental effect on net income if this segment is eliminated, assuming the segment's fixed expenses can be allocated to profitable segments? a. $316000 increase b. $316000 decrease C . $5400 decrease Cannot be determined from the data provided