SEE -11-AA 9. ab BIU...A - - BA#66- DX HE EM 4.00 St EP THE HEN be *** #t f H 1 M D E G K The HSA (Hult Students Association) has started selling gluten free cigars and chewing tobacco from a joint process involving the processing of tobacco leaves. Joint costs are $55,000 for this process and yields 2,000 pounds of cigars and 4,000 pounds of chewing tobacco, Cigars sell for $80/pound and chewing tobacco sells for $20/pound. Cigars require $80,000 in spearable costs while chewing tobacco requires $50,000 in separable costs, Chewing tobacco can be processed further for $30,000 in additional separable costs into a mint flavored premium chewing tobacco that would sell for $30/pound. a) If the HSA process chewing tobacco into the mint flavored premium chewing tobacco, will profit increase or decrease and by how much? (10%) b) What is the maximum amount that joint costs can increase before it would not be better to process chewing tobacco further into premium chewing tobacco (84) Pounds Selling Price Separable Costs Cigars 2.000 $ 80.00 $ 80,000 Joint Costs $ 55,000.00 Chewing Tobacco 41000 S 20.00 $ 50,000 a) Increase or Decrease? How Much? b) Maximum amount joint cost can increase + + MCQ 16 (2%) MCQ 15 (2%) ... MCQ 14 (1%) MCQ 17 (2%) Question 21 (18%) Question 20 (16%) Question 18 (24%) Question 19 (18%) 2 o ACC220 Midterm Exam File (oct 21)-2 - Excel HE PDF 2 .nl - AA ab I U A. 6. % ). A ! A24 f d) If you eliminate all the avoidable fixed costs and revenue stays the same, which department is preforming the best and why? x) D 1 Jasmin and Pietro have decided to open their own grocery store, giving Hector and Juan some competition. They laid out the store with the following four departments: 2 Meat Eater, Vegan, Paleo, and Ketogenic. The past month's income statement is given below 3 4 Entire Store Meat Eater Vegan Paleo Ketogenic 5 Sales $ 245.000 100,000 $ 90,000 $ 44,000 $ 11,000 6 Variable Costs s 179,000 76,000 $ 62 000 $ 34 000 $ 7.000 7 Contribution Margin $ 66,000 $ 24,000 $ 28,000 $ 10,000 $ 4,000 8 Avoidable Fixed Costs S 38 000 $ 10,000 $ 21,500 $ 4,000 $ 2.500 9 Unavoidable Foxed Costs S 17.400 S 6.000 $ 2.500 5 6,700 $ 2,200 10 Operating Profit/Loss $ 10,600 S 8,000 $ 4,000 $ (700) S (700) 11 12 $20,000 of this avoidable fixed cost is a work term student that is launching their vegan based diet meals 13 14 a) Jasmin and Petro are considering dropping the Paleo or ketogenic department due to the operating loss they are creating 15 If either department, or both departments are dropped, how will overall operating income be affected? (6) 16 17 Opearting Income 18 Drop Paleo 19 Drop Ketogenic 20 Drop Both Departments 21 22 b) If just one department is cut, what department would you cut and why? (4%) 23 c) Which department is preforming the best? (Defend answer with data (34) 24 d) If you eliminate all the avoidable fixed costs and revenue stays the same, which department is preforming the best and why? (3) Question 21 (181 25 ... MCQ 14 (19) MCQ 15 (29) MCQ 16 (29) MCQ 17 (2%) Question 18 (24%) Question 19 (18%) Question 20 (16%) 2020/1021 o Delete + F12 PASC Ins F11 F10 F9