61. A company expects to produce and sell 7,000 units of a single product. The following additional company information is available: 

Variable costs (per unit)

 

Production costs

$20

Nonproduction costs

$3

Fixed costs (in total)

 

Overhead

$175,000

Nonproduction

$14,000

Compute this company’s total cost per unit.A.  $23B.  $45C.  $27D.  $50E.  $5

 

 

62. A company expects to produce and sell 8,000 units of a single product. Management desires a 20% return on assets of $1,520,000. The following additional company information is available: 

Variable costs (per unit)

 

Production costs

$78

Nonproduction costs

$22

Fixed costs (in total)

 

Overhead

$110,000

Nonproduction

$40,000

Compute markup per unit. Assume that markup percentage equals desired profit divided by total costs.A.  $118.75B.  $156.75C.  $91.75D.  $38.00E.  $100.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63. A company expects to produce and sell 9,000 units of a single product. Management desires an 18% return on assets of $1,750,000. The following additional company information is available: 

Variable costs (per unit)

 

Production costs

$79

Nonproduction costs

$5

Fixed costs (in total)

 

Overhead

$279,000

Nonproduction

$90,000

Compute markup per unit. Assume that markup percentage equals desired profit divided by total costs.A.  $35B.  $84C.  $110D.  $125E.  $160

 

 

64. A company expects to produce and sell 15,000 units of a single product. Management desires a 15% return on assets of $2,000,000. The following additional company information is available: 

Variable costs (per unit)

 

Production costs

$65

Nonproduction costs

$7

Fixed costs (in total)

 

Overhead

$97,000

Nonproduction

$23,000

Compute selling price per unit given that markup percentage equals desired profit divided by total costs.A.  $80B.  $100C.  $20D.  $72E.  $92

 

 

65. A company expects to produce and sell 20,000 units of a single product. Management desires a 22% return on assets of $3,000,000. The following additional company information is available: 

Variable costs (per unit)

 

Production costs

$105

Nonproduction costs

$9

Fixed costs (in total)

 

Overhead

$350,000

Nonproduction

$120,000

Compute selling price per unit given that markup percentage equals desired profit divided by total costs.A.  $137.50B.  $33.00C.  $170.50D.  $114.00E.  $122.50

 

 

 

 

 

 

 

 

66. Wade Company is operating at 75% of its manufacturing capacity of 140,000 product units per year. A customer has offered to buy an additional 20,000 units at $32 each and sell them outside the country so as not to compete with Wade. The following data are available: 

Costs at 75% capacity:

Per Unit

 

Total

Direct materials

$12.00

$1,260,000

Direct labor

9.00

945,000

Overhead (fixed and variable)

15.00

1,575,000

Totals

$36.00

$3,780,000

In producing 20,000 additional units, fixed overhead costs would remain at their current level but incremental variable overhead costs of $6 per unit would be incurred. What is the effect on income if Wade accepts this order?A.  Income will decrease by $4 per unit.B.  Income will increase by $4 per unit.C.  Income will increase by $5 per unit.D.  Income will decrease by $5 per unit.E.  Income will increase by $11 per unit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67. Termus Industries is operating at 85% of its manufacturing capacity of 50,000 product units per year. A customer has offered to buy an additional 4,000 units at $25 each and sell them outside the country so as not to compete with Termus. The following data are available: 

Costs at 85% capacity:

Per Unit

 

Total

Direct materials

$10.00

$425,000

Direct labor

8.00

340,000

Overhead (fixed and variable)

13.00

552,500

Totals

$31.00

$1,317,500

In producing 4,000 additional units, fixed overhead costs would remain at their current level but incremental variable overhead costs of $4 per unit would be incurred. What is the effect on income if Termus accepts this order?A.  Income will decrease by $6 per unit.B.  Income will increase by $6 per unit.C.  Income will increase by $7 per unit.D.  Income will decrease by $3 per unit.E.  Income will increase by $3 per unit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68. Paz Inc. manufactures a product that contains a small motor. The company has always purchased this motor from a supplier for $55 each. Paz recently upgraded its own manufacturing capabilities and now has enough excess capacity (including trained workers) to begin manufacturing the motor instead of buying it. The company prepared the following per unit cost projections of making the motor, assuming that overhead is allocated to the part at the normal predetermined overhead rate of 150% of direct labor cost. 

Direct materials

$16

Direct labor

20

Overhead (fixed and variable)

30

Total

$66

The required volume of output to produce the motors will not require any incremental fixed overhead. Incremental variable overhead cost is $21 per motor. What is the effect on income if Paz decides to make the motors?A.  Income will decrease by $2 per unit.B.  Income will increase by $2 per unit.C.  Income will increase by $11 per unit.D.  Income will decrease by $11 per unit.E.  Income will increase by $19 per unit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

69. Derby Inc. manufactures a product which contains a small part. The company has always purchased this motor from a supplier for $125 each. Derby recently upgraded its own manufacturing capabilities and now has enough excess capacity (including trained workers) to begin manufacturing the motor instead of buying it. The company prepared the following per unit cost projections of making the motor, assuming that overhead is allocated to the part at the normal predetermined overhead rate of 150% of direct labor cost. 

Direct materials

$38

Direct labor

50

Overhead (fixed and variable)

75

Total

$163

The required volume of output to produce the motors will not require any incremental fixed overhead. Incremental variable overhead cost is $21 per motor. What is the effect on income if Derby decides to make the motors?

A.  Income will decrease by $16 per unit.B.  Income will increase by $16 per unit.C.  Income will increase by $23 per unit.D.  Income will decrease by $23 per unit.E.  Income will increase by $39 per unit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70. Wilder Inc. manufactures a product that contains a small computer chip. The company has always purchased this computer chip from a supplier for $110 each. Wilder recently upgraded its own manufacturing capabilities and now has enough excess capacity (including trained workers) to begin manufacturing the computer chip instead of buying it. The company prepared the following per unit cost projections of making the computer chip, assuming that overhead is allocated to the part at the normal predetermined overhead rate of 150% of direct labor cost. 

Direct materials

$32

Direct labor

40

Overhead (fixed and variable)

60

Total

$132

The volume of output to produce the computer chip will not require any incremental fixed overhead. Incremental variable overhead cost is $42 per computer chip. What is the effect on income if Wilder decides to make the computer chips?A.  Income will decrease by $4 per unit.B.  Income will increase by $4 per unit.C.  Income will increase by $38 per unit.D.  Income will decrease by $38 per unit.E.  Income will increase by $44 per unit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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