Question : 48.Denray Deli has two locations, downtown and in the town : 1302787

 

 

48.Denray Deli has two locations, downtown and in the town mall. During March, the company reported total net income of $144,000 with sales of $1,200,000. The contribution margin in the downtown store was 30%. The contribution margin in the town mall store is $80,000. Total fixed costs are allocated as $110,000 in the downtown store and $90,000 in the town mall location. How much are sales at the downtown location?

A.$880,000

B.$1,146,667

C.$254,000

D.None of these answer choices are correct.

 

 

49.Mel’s Diner owns a single restaurant, which has a cantina primarily used to seat patrons while they wait on their tables. The company is considering eliminating the cantina. Segmented contribution income statements are as follows and fixed costs applicable to both segments are allocated on the basis of square footage.

 

RestaurantCantinaTotal

Sales              $800,000              $200,000              $1,000,000

Variable costs              475,000              160,000              635,000

Direct fixed costs              50,000              15,000              65,000

Allocated fixed costs              212,500                 37,500              250,000

Net income              $  62,500              ($ 12,500)              $50,000

 

What effect will occur if Mel’s Diner eliminates the cantina if there is no effect on restaurant sales?

A.Net income will increase by $12,500.

B.Net income will decrease to $37,500.

C.Net income will decline by $25,000.

D.Net income will be $62,500.

 

50.The Book Rack has two locations, downtown and on campus. During March, the company reported net income of $164,000 and sales of $1.2 million. The contribution margin in the downtown store was $320,000 (32% of sales). The contribution margin in the campus store is $110,000. Direct fixed costs are $90,000 in the downtown store and $93,000 in the campus location. How much are total variable costs?

A.$953,000

B.$770,000

C.$680,000

D.$430,000

 

51.Abacus has 800 obsolete calculators that are carried in inventory at a cost of $1,920. If these calculators are upgraded at a cost of $3,100, they could be sold for $4,500. Alternatively, the calculators could be sold “as is” for $1,600. What is the net advantage or disadvantage of reworking the calculators?

A.$1,400 advantage

B.$2,900 advantage

C.$5,440 disadvantage

D.$200 disadvantage

 

52.Swell Computers has 12 obsolete computers that are carried in its inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they could be sold for $15,300. Alternatively, the computers could be sold “as is” for $9,000. What is the net advantage or disadvantage of upgrading the computers?

A.$6,300 advantage

B.$1,200 disadvantage

C.$5,400 disadvantage

D.$3,000 advantage

 

 

53.The following are production and cost data for two products, buckets and pails, produced in batches of 600 each.

 

BucketsPails

Contribution margin per batch              $360              $250

Machine set-ups needed per batch              14              9

 

The company can only perform 9,450 set-ups each period, yet there is unlimited demand for each product. What is the maximum contribution margin for the year?

A.$366,000

B.$243,000

C.$1,050

D.$262,500

 

54.The following are production and cost data for two products, A and B, produced in batches of 100 units.

 

Product AProduct B

Contribution margin per batch              $450              $340

Machine set-ups needed per batch              25              20

 

The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the incremental profit from producing Product A instead of Product B for the year?

A.$216,000

B.$204,000

C.$12,000

D.$54,000

 

55.Marshal Costumes owns two stores and management is considering eliminating the Mandarin store due to declining sales. Common fixed costs are allocated on the basis of sales.Contribution income statements are as follows:

ArlingtonMandarinTotal

Sales              $300,000              $200,000              $500,000

Variable costs              160,000              130,000              290,000

Direct fixed costs              40,000              20,000              60,000

Allocated fixed costs                80,000                65,000              145,000

Net Income              $  20,000              $(15,000)              $ 5,000

 

Marshal’s management feels that if they eliminate the Mandarin store, that sales in the Arlington store will increase by 10%. If the Mandarin store is closed, what is the incremental effect on profit for Marshal Costumes?

A.Increase by $17,000

B.Decrease by $36,000

C.Increase by $22,000

D.Decrease by $20,000

 

 

56.Publix has 2,700 pounds of bananas with a total cost of $864. Because the bananas have become too ripe, Publix is contemplating whether it should use the bananas to bake banana bread or sell the bananas ‘as is’ to the homeless center for $1,485. In addition to the cost of the bananas, it would cost $2,565 to convert the bananas into bread, which could then be sold for a total of $4,480. However, a special oven to bake the bread will have to be rented for an additional $300. What is the incremental effect on income if Publix converts the bananas to banana bread?

A.Increase of $130

B.Increase of $430

C.Decrease of $734

D.Increase of $1,615

 

57.Fanatic Footwear has two store locations, midtown and at the beach. During October, the company reported net income of $80,000 on sales of $450,000. Sales in the midtown store were $170,000 and variable costs in the beach store were 40% of sales. The contribution margin in the midtown store was $85,000. If total direct fixed costs are $40,000, how much are total fixed costs for Fanatic Footwear?

A.$93,000

B.$150,000

C.$370,000

D.None of these answer choices are correct.