Reference: Survey of Accounting 6th edition Book
These are practice questions with unlimited attempts but I need help learning the problems
Harcourt Manufacturing {HM} has the capacity to produce 10,800 fax machines per year. HM currently produces and sells 7,800 units per year. The fax machines normally sell for $180 each. Modem Products has offered to buy 2,800 fax machines from HM for $100 each. Unit level costs associated with manufacturing the fax machines are $31 each for direct labor and $56 each for direct materials. Product-level and facility-level costs are $58,000 and $73,000, respectively. How much would prot increase {decrease} if HM accepted this special order? A condensed income statement for Gilbert, Inc. follows: (amounts are shown in thousands} Products F G H Total Sales (total) 3' 243 $ 184.9 $ 369 $ T843 Total Unit-level Costs (136) (163.8) (288) (584.8} Contribution Margin 194 23.2 152 279.2 Companywide Facility-Level Costs (25.8} (38.8) (48) (194.5} Income (Loss) $1 78-2 $ (7-5) $ 194 $1 174-5 Gilbert's management is considering whether to eliminate manufacturing product G at the beginning of the next year. The elimination will have no effect on the sales or unit-level costs of products F and H. The change in income that would result from eliminating product 6 is Jason Company is considering replacing equipment which originally cost $800,000. New equipment costs $700,000 and the old equipment can be sold for $500,000. What is the sunk cost in this situation? Tom's Toolery is operating at 70% of its productive capacity. It is currently paying $14 per unit for a part used in its manufacturing operation. Tom's estimates it could make the part internally for a total cost of $15 per unit, consisting of $10 of unit-level production costs and $5 of facility-level costs that are currently attributed to other products. Tom's usually purchases 69,000 units of the part each year. These units could be manufactured using Tom's excess capacity. What is the effect on cost ifthe company decides to start making the part? Based on the segment income statement below, Chips? Inc. is considering eliminating its Barbecue Division line. Revenue tram Barbecue Division sales $ 512,666 Salaries for Barbecue Division workers {112,666} Direct material (318,666) Sunk costs (equipment depreciation) {?8,66B} llocated companywide facilitysustaining costs (56,666} Net loss $ (52,666} lfthe Division is eliminated, what is the total amount of avoidable cost? Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line. Revenue from Barbecue Division sales $ 516,666 Salaries for Barbecue Division workers {116,666} Direct material {315,666} Sunk costs (equipment depreciation) (7?,566} llocated companywide facilitysustaining costs {55,666} Net loss $ (4?,593} If Barbecue Division were eliminated, profitability would
