QUESTION 1 5.89 points Save Answer When a company is considering the option of processing its product further, to achieve higher sales revenues, they must ignore the cost that is required to produce the basic product, before processing further fact that will additional processing produce any environmental toxins additional costs necessary to process further incremental revenue that can be earned if processed further QUESTION 2 5.89 points Save Answer Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available Replacement Machine Old Machine $35,0 inal cost $45,00 aining useful life in years urrent age in vears Book value $25,00 urrent di sal value in cash $8,00 Future disposal value in cash (in 5 years) nual cash operating costs 7.00 Which of the information provided in the table is irrelevant to the replacement decision the price of the new machine the annual cash operating costs the current disposal value of the old machine the original cost of the old machine QUESTION 3 5.89 points Save Answer Rica Company is a price-taker and uses a target-pricing approach. Refer to the following information: Production volume 600,000 units pery $3 arket unit ired operating income 15%lof total assets $13,900,00 otal assets What is the target full product cost in total for the year? Assume all units produced are sold. $18,000,000 $13,900,000 $2,085,000 $15,915,000 QUESTION 4 5.89 points Save Answer Clay Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp. The following per unit data are available Bedford Lam Lowell Lam $1 ariable costs achine hours required for 1 lam Total fixed costs are $30,000. Marketing data indicate that the company can sell up to 8,000 units of the Bedford lamp and up to 4,000 units of the Lowell lamp. Machine hour capacity is 25,000 hours per year. Which product mix will deliver the optimum operating income? 12,500 Bedford lamps and zero Lowell lamps 7,500 Bedford lamps and 3,000 Lowell lamps 4,500 Bedford lamps and 4,000 Lowell lamps 8,000 Bedford lamps and 2,250 Lowell lamps QUESTION 5 5.89 points Save Answer Which of the following statements describes a scenario when management should consider dropping a business division? The division has been reporting an operating loss consistently The division's avoidable fixed costs are less than its contribution margin. The division's unavoidable fixed costs are greater than its operating loss. The division's avoidable fixed costs are greater than its contribution margin. QUESTION 6 5.89 points Save Answer Which of the following is a major consideration when analyzing a special order? The company must have a good stock turnover ratio The sunk costs of the decision must not exceed the irrelevant costs. The price must be high enough to cover any incremental costs to fill the order. The profit margin of the special sale must be higher than the regular sales. QUESTION 7 5.89 points Save Answer Centric Sail Makers manufactures sails for sailboats. The company has the capacity to produce 35,000 sails per year, and is currently producing and selling 25,000 sails per year. The following information relates to current production: S17 ale r unit riable costs per unit: Manufacturi $2 Marketing and administrative otal fixed costs Manufacturi Marketing and administrative If a special sales order is accepted for 5,500 sails at a price of $150 per unit, and fixed costs remain unchanged, what is the change in operating income? (Assume the special sales order will require variable manufacturing costs and variable marketing and administrative costs.) Operating income increases by $825,000. Operating income increases by $385,000. OOperating income decreases by $825,000. Operating income decreases by $385,000
