Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use the following information for questions 19 and 20 Queen Co. produces two products, A and B. An A unit sells for $60 and costs

Use the following information for questions 19 and 20 Queen Co. produces two products, A and B. An A unit sells for $60 and costs $20 of direct labor, $10 of direct materials and $5 of variable manufacturing overhead to produce. $10 of fixed overhead is allocated to the product from machinery used to produce both products. Queen has the capacity to produce 20,000 units a month and currently produces 15,000 units. 19) A new customer has requested an order of 1,000 A units at $50 a unit. Queen should A) Reject the order because the price is not $60 B) Accept the order because it would only cost $35 a unit to produce them and Queen would make $15 a unit C) Reject the order because the average cost to produce an A unit is $45 and Queen would only make $5 a unit D) Tell the customer to go place the order at King Co, Queens competitor 20) In Queens decision the fixed costs were: A) Relevant to the decision because they were allocated to the products B) Relevant to the decision because they had already been purchased C) Not relevant to the decision because excess capacity existed and the fixed costs would not change D) Reason enough to reject the order

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions