Question :
62.When deciding to accept or reject a special order, which : 1302809
62.When deciding to accept or reject a special order, which of the following costs is most likely to be irrelevant?
A.The wages of direct labor to make the order
B.Depreciation on the machinery used to make the order
C.The raw material used to make the order
D.The electricity used to run the machine to make the order
63.In accepting a special order, which one of the following is not considered?
A.Whether production capacity exists to complete the order
B.Whether demand for other products will be affected
C.Whether the fixed costs of production will increase
D.Whether the contribution margin per unit is greater for products in the special order than the contribution margin for the same products sold to regular customers
64.Which of the following is relevant in deciding whether to accept or reject a special order?
A.The impact the order will have on existing business
B.The price that will be charged on the special order
C.The impact the order will have on existing business and the price that will be charged on the special order
D.None of these answer choices are correct.
65.Which of the following statements is true of fixed costs of production in determining whether to accept or reject a special order?
A.They are increased in proportion to the amount that production increases when a special order is accepted.
B.They are often considered relevant if the plant is operating at capacity.
C.If the order can be completed without creating additional fixed costs, they are relevant.
D.They are always relevant in the decision.
66.Wagner Enterprises is contemplating accepting a special order. The company determined that the order will cause an increase in fixed costs. Should the order be accepted?
A.No, as any increase in fixed costs will reduce the company’s profit
B.Yes, as long as the total revenue is greater than the associated variable costs
C.Yes, if the increase in fixed costs is less than the incremental revenue
D.Yes, if the incremental revenue is greater than the total incremental costs
67.Cinotti Bread Depot bakes and sells each bagel for $1.25. The cost of producing 600,000 bagels in the prior year was:
Revenues $750,000
Direct materials 330,000
Direct labor 66,000
Manufacturing overhead – fixed 132,000
Manufacturing overhead – variable 84,000
At the start of the current year, Cinotti received a special order for 15,000 bagels to be sold for $1.10 per bagel. The company estimates it will incur an additional $700 in total fixed costs in order to lease a special machine needed to bake the bagels in the customer’s logo shape. Also, this order will not affect any of its other operations. Should the company accept the special order?
A.No, profit will decrease by $2,950
B.No, profit will decrease by $2,250
C.Yes, profit will increase by $3,800
D.Yes, profit will increase by $500
68.Bell Supply House produces recycled paper that it sells by the case. Budgeted amounts for the coming year are as follows:
Revenues (20,000 cases at $12 each) $240,000
Direct material $40,000
Direct labor 70,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 30,000 190,000
Net income $ 50,000
LTS Enterprises has offered to purchase 2,000 cases of the paper from Bell at a price of $12.50 per case. This special order will have additional variable costs of $0.35 per case due to delivery costs. Bell Supply House has the capacity to produce this order and it will not affect any of its other operations. How much is the incremental revenue associated with accepting this special order?
A.$8,300
B.$25,000
C.$165,000
D.$9,000
69.Bell Supply House produces recycled paper that it sells by the case. Budgeted amounts for the coming year are as follows:
Revenues (20,000 cases at $12 each) $240,000
Direct material $40,000
Direct labor 70,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 30,000 190,000
Net income $ 50,000
LTS Enterprises has offered to purchase 2,000 cases of the paper from Bell at a price of $12.50 per case. This special order will have additional variable costs of $0.35 per case due to delivery costs. Bell Supply House has the capacity to produce this order and it will not affect any of its other operations. How much is the incremental cost of accepting the special order?
A.$16,000
B.$46,000
C.$16,700
D.$19,000
70.Bell Supply House produces recycled paper that it sells by the case. Budgeted amounts for the coming year are as follows:
Revenues (20,000 cases at $12 each) $240,000
Direct material $40,000
Direct labor 70,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 30,000 190,000
Net income $ 50,000
LTS Enterprises has offered to purchase 2,000 cases of the paper from Bell at a price of $12.50 per case. This special order will have additional variable costs of $0.35 per case due to delivery costs. Bell Supply House has the capacity to produce this order and it will not affect any of its other operations. How much is the incremental profit (loss) associated with the special order?
A.$8,300
B.$9,000
C.($21,000)
D.($11,700)
71.Element Boards makes skateboard wheels. Budget information regarding current period operations reflecting the sale of 200,000 wheels appears below:
Revenue (200,000 wheels at $3.00) $600,000
Direct materials 120,000
Direct labor 220,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 70,000
The USA Skate Team has approached Element with a special order for 6,000 wheels at a price of $2.75 per wheel. Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company’s orders. However, Element is operating at capacity and will incur an additional $5,000 in fixed manufacturing overhead if the order is accepted. What is the incremental revenue associated with accepting the special order?
A.$616,500
B.$200
C.$16,700
D.$16,500
