Question 1: (Chapter 19) Archer Industries sells three different sets of sportswear. Sleek sells for $30 and has variable costs of $18; Smooth sells for $50 and has variable costs of $30; Potent sells for $70 and has variable costs of $45. The sales mix of the three sets is Sleek, 50%; Smooth, 3096; and Potent, 20%. Instructions: What is the weighted average unit contribution margin? Question 2: (Chapter 19) Movie House Company has 4,000 machine hours available to produce either Product 22 or Product 44. The cost accounting department developed the following unit information for each product: Product 22 Product 44 Sales price $20 $40 Direct materials 8 Direct labor 2 Variable manufacturing overhead 5 Fixed manufacturing overhead 5 Machine time required 60 minutes Instructions: 5 3 4 3 15 minutes Management wants to know which product to produce in order to maximize the company's income. Taking into consideration the constraints under which the company operates, determine which product should be produced and sold. Question 3: (Chapter 19) Account-Able Company provides primarily two lines of services accounting and tax. Accounting- related services represent 60% of its revenue and provide a contribution margin ratio of 30%. Tax services represent 40% of its revenue and provide a 45% contribution margin ratio. The company's fixed costs are $9,000,000. Instructions: (a) Calculate the revenue from each type of service that the company must achieve to break (b) The company has a desired net income of $1,800,000. What amount of revenue would Account-Able earn from tax services if it achieves this goal with the current sales mix? even. Question 4: (Chapter 20) Know the steps involved in the management decision making process Question 5: (Chapter 20) Pederson Enterprises produces glant stuffed bears. Each bear consists of $12 of variable costs and $9 of fixed costs and sells for $45. A wholesaler offers to buy 8,000 units at $14 cach, of which Pederson has the capacity to produce. This is a one-time order and acceptance of this proposal will not affect the company's regular sales. Pederson will incur extra shipping costs of Si per bear Instructions: Determine the incremental income or loss that Pederson Enterprises would realize by accepting the special order. Question 6: (Chapter 20) Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided the following unit costs for its commercial docks: 140 80 150 Direct materials $100 Direct labor Variable overhead Fixed overhead (40% avoidable) Instructions: Prepare an incremental analysis which shows the effect of the make-or buy decision. Question 7: (Chapter 20) Elmdale Company has a machine that affixes labels to bottles. The machine has a book value of $80,000 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available at a cost of $300,000 that will have a 5-year useful life with no salvage value. The new machine will lower annual variable production costs from $520,000 to $410,000 Instructions Prepare an analysis showing whether the old machine should be retained or replaced Question : (Chapter 21) Cobalt Company manufactures Custom teapots. The market for teapots is very competitive. The current market price for a teapot is $65. Cobalt Company would like a profit of $14 per teapot. What target cost Cobalt Company should set to accomplish this objective? Question 9: (Chapter 21) Simpson Cell Phone Company has developed a new cell phone called Optimum. The company plans to sell this phone through its website, which updates monthly. Given market research, Simpson believes that it can charge $40 for the phone. Prototypes of the phone, however, are costing $41. By using cheaper materials and gaining efficiencies in mass production, Simpson believes it can reduce the phone's cost substantialy, Simpson wishes to earn a return of 40% of the selling price
