Question :
31. Paxton Products has three product lines: A, B, and C.
A
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31. Paxton Products has three product lines: A, B, and C.
A
B
C
Total
Sales
$90,000
$150,000
$200,000
$440,000
Variable costs
50,000
120,000
100,000
270,000
Contribution margin
40,000
30,000
100,000
170,000
Fixed costs
15,000
40,000
50,000
105,000
Net income
$25,000
$(10,000)
$ 50,000
$ 65,000
Management is considering dropping product line B. In order for the dropping of product line B to not cause an overall decrease in profits, product line B’s avoidable fixed costs should be at least: A. $40,000.B. $30,000.C. $10,000.D. $70,000.
32. Which of the following statements regarding resource utilization is not true? A. Resource utilization decisions are usually short-term in nature.B. Resource utilization decisions require the identification of a constraint.C. Resource utilization decisions relates to an analysis of which fixed costs are unavoidable.D. Resource utilization decisions require managers to compute a product’s contribution margin.
33. Which of the following is the least likely to be a consideration in a resource utilization decision? A. Shelf spaceB. Direct labor hoursC. Machine timeD. Fixed costs
34. In resource utilization decisions, managers should: A. minimize the contribution margin per unit.B. minimize the use of the scarce resource.C. maximize the contribution margin per unit of scarce resource.D. maximize the contribution margin per unit.
35. Decker ProductsDecker Products manufactures standard and deluxe wooden swing sets. Selected data related to each product is as follows:
Standard
Deluxe
Sales price per unit
$900
$2,000
Direct materials cost per unit
100
500
Direct labor cost per unit
300
700
Variable overhead cost per unit
50
100
Machine hours per unit
4 hours
8 hours
Most of the manufacturing process for the sets is done on machines. There is a maximum of 10,000 machine hours available each year. Refer to the Decker Products information above. What is the contribution margin per unit of limited resource for each type of set? A. Standard: $125.00 Deluxe: $100.00B. Standard: $225.00 Deluxe: $250.00C. Standard: $450.00 Deluxe: $700.00D. Standard: $112.50 Deluxe: $ 87.50
36. Decker ProductsDecker Products manufactures standard and deluxe wooden swing sets. Selected data related to each product is as follows:
Standard
Deluxe
Sales price per unit
$900
$2,000
Direct materials cost per unit
100
500
Direct labor cost per unit
300
700
Variable overhead cost per unit
50
100
Machine hours per unit
4 hours
8 hours
Most of the manufacturing process for the sets is done on machines. There is a maximum of 10,000 machine hours available each year. Refer to the Decker Products information above. If demand were strong for both sets and the company could sell an unlimited number of either style, how many of which kind(s) of wooden swing set(s) should be produced in order to maximize profits? A. 2,500 standard setsB. 1,250 deluxe setsC. 833 standard sets and 833 deluxe setsD. 1,500 standard sets and 1,250 deluxe sets
37. Decker ProductsDecker Products manufactures standard and deluxe wooden swing sets. Selected data related to each product is as follows:
Standard
Deluxe
Sales price per unit
$900
$2,000
Direct materials cost per unit
100
500
Direct labor cost per unit
300
700
Variable overhead cost per unit
50
100
Machine hours per unit
4 hours
8 hours
Most of the manufacturing process for the sets is done on machines. There is a maximum of 10,000 machine hours available each year. Refer to the Decker Products information above. If demand were strong for both sets and the company could sell an unlimited number of either style, what is the maximum total contribution margin the company could have? A. $ 875,000B. $ 281,250C. $1,125,000D. $1,750,000
38. Kellerman Detailing ServiceKellerman Detailing Service provides two types of car detailing packages: the standard and the deluxe. Selected data related to each package is as follows:
Standard
Deluxe
Sales price
$90
$195
Direct materials cost
20
40
Direct labor cost
5
40
Variable overhead cost
5
15
Direct labor hours cost
3 hours
4 hours
Most of the car detailing is done by hand. Refer to the Kellerman Detailing Service information above. There is a maximum of 4,050 direct labor hours available each year. If demand were equally strong for both packages and the company could sell an unlimited number of either package, how many of which kind(s) of package(s) should be sold in order to maximize profits? A. 1,400 standardB. 1,075 deluxeC. 1,400 standard and 1,075 deluxeD. 810 standard and 810 deluxe
39. Kellerman Detailing ServiceKellerman Detailing Service provides two types of car detailing packages: the standard and the deluxe. Selected data related to each package is as follows:
Standard
Deluxe
Sales price
$90
$195
Direct materials cost
20
40
Direct labor cost
5
40
Variable overhead cost
5
15
Direct labor hours cost
3 hours
4 hours
Most of the car detailing is done by hand. Refer to the Kellerman Detailing Service information above. For the upcoming year, there is a maximum of 4,300 direct labor hours available. Management believes that the demand for both the standard and deluxe detailing is limited to 1,000 each per year. How many standard and deluxe detailing jobs should be sold in the upcoming year in order to maximize profits? A. Standard: 900 Deluxe: 750B. Standard: 100 Deluxe: 1,000C. Standard: 1,400 Deluxe: 1,000D. Standard: 450 Deluxe: 900
40. Kellerman Detailing ServiceKellerman Detailing Service provides two types of car detailing packages: the standard and the deluxe. Selected data related to each package is as follows:
Standard
Deluxe
Sales price
$90
$195
Direct materials cost
20
40
Direct labor cost
5
40
Variable overhead cost
5
15
Direct labor hours cost
3 hours
4 hours
Most of the car detailing is done by hand. Refer to the Kellerman Detailing Service information above. For the upcoming year, there is a maximum of 4,300 direct labor hours available. Management believes that the demand for both the standard and deluxe detailing is limited to 1,000 each per year. If the company maximizes profits, what is the maximum contribution margin the company could have in the upcoming year? A. $ 67,500B. $ 60,000C. $106,000D. $ 60,750
