Question
Tori Inc. has some material that originally cost $69,600. The material has a scrap value of $30,700 as is, but if reworked at a cost
Tori Inc. has some material that originally cost $69,600. The material has a scrap value of $30,700 as is, but if reworked at a cost of $1,700, it could be sold for $31,400. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap? (CIMA adapted)
$(70,600)
$(1,000)
$29,700
$(39,900)
During 2016, the Beach Restaurant had sales revenues and food costs of $880,000 and $640,000, respectively. During 2017, Beach plans to introduce a new menu item that is expected to increase sales revenues by $140,000 and food costs by $56,000. Assuming no changes are expected for the other food items, operating profits for 2017 are expected to increase by
$324,000.
$140,000.
$84,000.
$56,000.
In 2016, the Merkel Company had revenues of $2,900,000 and costs of $2,400,000. During 2017, Merkel will be introducing a new product line that is expected to increase sales revenue by $290,000 and costs by $178,000. Assuming no changes are expected for the other products, the operating profits are expected to increase by
$612,000.
$290,000.
$178,000.
$112,000.
During 2016, Seth Britain Lab supplied hospitals with a comprehensive diagnostic kit for $150. At a volume of 85,000 kits, Seth had fixed costs of $1,150,000 and a profit before income taxes of $125,000. Due to an adverse legal decision, Seth's 2017 liability insurance increased by $1,275,000 over 2016. Assuming the volume and other costs are unchanged, what should the 2017 price be if Seth is to make the same $125,000 profit before income taxes? (CPA adapted)
$151.50.
$165.00.
$181.50.
$300.00.
The Crispy Baking Company is considering the expansion of its business into door-to-door delivery service. This would require an additional $14,500 in labor costs per month. Company-owned vehicles now used to make morning deliveries to restaurants could be used in the afternoons to make the home deliveries. However, it is estimated that an additional $7,000 would be required per month for gas, oil, and maintenance. It is further estimated that the home delivery use of the trucks would be allocated 45% of the existing $7,900 fixed vehicle costs. What is the differential delivery cost per month for expanding into the home delivery market? $14,500.
$21,500.
$24,650.
$25,055.
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