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Lusk Corporation produces and sells 14,500 units of Product X each month. The selling price of Product X is $27 per unit, and variable expenses
Lusk Corporation produces and sells 14,500 units of Product X each month. The selling price of Product X is $27 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $73,000 of the $100,000 in fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the companys overall net operating income would:
Given the following data: Return on investment 32% Turnover 2.6 Margin 8% Sales $260,000 Average operating assets $65,000 Minimum required rate of return 18% The residual income would be: Cabal Products is a division of a major corporation. Last year the division had total sales of $21,720,000, net operating income of $1,346,640, and average operating assets of $4,778,400. The company's minimum required rate of return is 15%. The division's margin is closest to: (Round your answer to 1 decimal place.) The West Division of Frede Corporation had average operating assets of $647,000 and net operating income of $125,000 in December. The minimum required rate of return for performance evaluation purposes is 18%. What was the West Division's minimum required return in December? Last year the Uptown Division of Gorcen Enterprises had sales of $300,000 and a net operating income of $24,000. The average operating assets at Uptown last year amounted to $120,000. Last year at Uptown the return on investment was: The West Division of Frede Corporation had average operating assets of $700,000 and net operating income of $120,800 in December. The minimum required rate of return for performance evaluation purposes is 16%. What was the West Division's minimum required return in December? The West Division of Frede Corporation had average operating assets of $700,000 and net operating income of $120,800 in December. The minimum required rate of return for performance evaluation purposes is 16%. What was the West Division's residual income in December? Lusk Corporation produces and sells 14,500 units of Product X each month. The selling price of Product X is $27 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $73,000 of the $100,000 in fixed expenses charged 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: Barrus Corporation makes 50,000 motors to be used in the productions of its power lawn mowers. The average cost per motor at this level of activity is as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $10.90 $9.90 $4.15 $5.10 This motor has recently become available from an outside supplier for $28.15 per motor. 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 to 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 this company. Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 18,000 cases of sauce each year but is currently only manufacturing and selling 16,500. The following costs relate to annual operations at 16,500 cases: Variable manufacturing cost Fixed manufacturing cost Variable selling and administrative cost Fixed selling and administrative cost Total Cost $231,000 $59,000 $33,000 $41,000 Gwinnett normally sells its sauce for $35 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1,500 cases of sauce but only if they can get the sauce for $15 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits for the year will: Nesmith Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below: Alternative A Alternative B Materials costs Processing costs Equipment rental Occupancy costs $30,000 $36,000 $68,000 $36,000 $11,400 $28,700 $19,700 $28,000 What is the differential cost of Alternative B over Alternative A, including all of the relevant costs? 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 $180,000, they can be sold for a total of $240,000. 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? The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: Sales Variable expenses $933,000 $412,000 Fixed manufacturing expenses Fixed selling and administrative expenses $347,000 $254,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $214,000 of the fixed manufacturing expenses and $125,000 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 calculationwhether relevant or not. Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 59,000 units per month is as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling & administrative expense Fixed selling & administrative expense $52.10 $10.00 $3.00 $21.10 $5.60 $27 The normal selling price of the product is $124.10 per unit. An order has been received from an overseas customer for 3,900 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $3.10 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $95.40 per unit. By how much would this special order increase (decrease) the company's net operating income for the monthStep by Step Solution
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