Question :
81. Teeco Systems Inc. has a limited amount of direct : 1256747
81. Teeco Systems Inc. has a limited amount of direct material available for products 1A1 and 2B2. Each unit of 1A1 has a contribution margin of $12 and each unit of 2B2 has a contribution margin of $30. A unit of 2B2 uses three times as much direct material as a unit of 1A1. What is Teeco’s most profitable sales mix, assuming there is unlimited demand for either product? A. Make all 2B2.B. Make all 1A1.C. Make equal number of units of 1A1 and 2B2.D. Make three times as many 1A1 as 2B2.E. Make three times as many 2B2 as 1A1.
82. Bath Company has a limited amount of direct material available for products 111 and 222. Each unit of 111 has a contribution margin of $5 and each unit of 222 has a contribution margin of $25. A unit of 222 uses four times as much direct material as a unit of 111. What is Bath’s most profitable sales mix, assuming there is unlimited demand for either product?A. Make all 222.B. Make all 111.C. Make equal number of units of 111 and 222.D. Make four times as many 111 as 222.E. Make four times as many 222 as 111.
83. What decision rule should be followed when deciding if a business segment should be eliminated?A. Segments generating a net loss should always be eliminated.B. Segments with revenues that are more than avoidable expenses should be considered for elimination.C. Segments with revenues that are more than unavoidable expenses should be considered for elimination.D. Segments with revenues that are less than avoidable expenses should be considered for elimination.E. Segments with revenues that are less than unavoidable expenses should be considered for elimination.
84. A company expects its three departments to yield the following income for next year:
Dept. Q
Dept. R
Dept. S
Sales
$6,000
$7,000
$8,000
Expenses
Avoidable
2,000
3,000
4,000
Unavoidable
1,500
2,500
4,500
Total expenses
3,500
5,500
8,500
Net income (loss)
$2,500
$1,500
$(500)
Compute the change to the company’s total net income if Dept. S is eliminated.A. $500 increaseB. $500 decreaseC. $4,000 increaseD. $4,000 decreaseE. $3,500 decrease
85. A company expects its three departments to yield the following income for next year:
Dept. A
Dept. B
Dept. C
Sales
$6,000
$5,000
6,800
Expenses
Avoidable
2,000
1,000
4,000
Unavoidable
1,500
3,000
2,500
Total expenses
3,500
4,000
6,500
Net income (loss)
$2,500
$1,000
$300
Compute the change to the company’s total net income if Dept. C is eliminated.A. $300 decreaseB. $300 increaseC. $2,800 decreaseD. $2,800 increaseE. $6,800 decrease
86. Flower Enterprises Inc. expects its three departments to yield the following income for next year:
Dept. F
Dept. G
Dept. H
Sales
$9,000
$10,000
$8,000
Expenses
Avoidable
3,000
2,000
5,000
Unavoidable
4,000
6,000
1,000
Total expenses
7,000
8,000
6,000
Net income (loss)
$2,000
$2,000
$2,000
Which of the following statements is true regarding Flower’s business segments?A. If Dept. F is eliminated, overall profit will decline $5,000.B. Overall profit will decline by $2,000 if any one of these segments is eliminated.C. If Dept. G is eliminated, overall profit will decline $8,000.D. If Dept. H is eliminated, overall profit will increase $3,000.E. Eliminating Dept. H will reduce overall profit more than eliminating Dept. F.
87. Barley Enterprises Inc. expects its three departments to yield the following income for next year:
Dept. D
Dept. E
Dept. F
Sales
$5,000
$10,000
$4,000
Expenses
Avoidable
3,000
2,000
5,000
Unavoidable
4,000
4,000
1,000
Total expenses
7,000
6,000
6,000
Net income (loss)
$(2,000)
$4,000
$(2,000)
Which of the following statements is true regarding Flower’s business segments?A. If Dept. F is eliminated, overall profit will increase by $2,000.B. Overall profit will decline no matter which of these segments is eliminated.C. If Dept. E is eliminated, overall profit will decline $4,000.D. If Dept. D is eliminated, overall profit will decrease by $2,000.E. Eliminating Dept. F will reduce overall profit more than eliminating Dept. D.
88. Rocko Inc. has a machine with a book value of $50,000 and a five-year remaining life. A new machine is available at a cost of $85,000 and Rocko can also receive $38,000 for trading in the old machine. The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life. Should the machine be replaced?
A. Yes, because income will increase by $14,000 per year.
B. Yes, because income will increase by $23,000 in total.
C. No, because the company will be $23,000 worse off in total.
D. No, because the income will decrease by $14,000 per year.
E. Rocko will be not be better or worse off by replacing the machine.
89. Hondo Company has a machine with a book value of $50,000 and a five-year remaining life. A new machine is available at a cost of $108,000 and Rocko can also receive $38,000 for trading in the old machine. The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life. Should the machine be replaced?
A. Yes, because income will increase by $14,000 per year.
B. Yes, because income will increase by $52,000 immediately.
C. No, because the company will be $108,000 worse off.
D. No, because the income will decrease by $14,000 per year.
E. Hondo will not be better or worse off by replacing the machine.
