Question : 78.Which statement true of the relative sales value method if : 1302790

 

 

78.Which statement is true of the relative sales value method if all joints products are sold at the split-off point?

                     The products will have the same gross margin ratio.

                     The products will have the same gross margin per unit.

A.Both Iand II

B.Neither Inor II

C.Only I

D.Only II

 

79.When making a decision to sell a joint product at the split-off point or process it further, which of the following is not relevant?

A.The amount of joint costs assigned

B.The sales value at the split-off point

C.The cost of further processing

D.The sales value after further processing

 

 

80.LanaTech produces three products, X, Y, and Z, from recycled paper. Budgeted data for next month follows:

 

XYZ

Units produced              800              2,400              1,600

Sales value at split-off per unit              $6              $15              $12

Additional processing costs per unit              $1              $4              $5

Joint production costs per unit              $2              $6              $4

Sales value if processed further per unit              $9              $20              $16

 

The joint cost of the recycled paper is $110,000. Which of the products should be produced beyond the split-off point?

XYZ

A.NoYesYes

B.YesYesNo

C.NoNoNo

D.NoYesNo

 

81.Ralston Tile produces three types of ceramic tiles, models 33, 41, and 56 from clay, which is mined in the Arizona desert. Budgeted data for next month follows:

 

334156

Units produced              3,000              4,500              6,000

Sales value at split-off per unit              $15              $18              $24

Additional processing costs per unit              $4              $6              $7

Joint production costs per unit              $2              $5              $5

Sales value if processed further per unit              $20              $23              $32

 

The joint cost of mining the clay is $80,000. Which of the products should be produced beyond the split-off point?

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A.YesYesYes

B.YesYesNo

C.NoYesYes

D.YesNoYes

 

82.One advantageof using an outside supplier is that

A.the adverse effect of a downturn in the business will be less severe.

B.it will enhance the manager’s control over the production process.

C.the component produced will always be of a better quality.

D.it will boost employee morale.

 

83.Which of the following is a disadvantage of using an outside supplier?

A.Employees may have to be laid off if production is outsourced.

B.The supplier assumes the risk of obsolete inventory.

C.The supplier may provide a cost savings due to increased efficiencies.

D.The supplier may have better quality control.

 

 

84.Which of the following costs are always incremental and relevant in decision analysis?

A.Opportunity costs and sunk costs

B.Sunkcosts and avoidable costs

C.Unavoidablecosts and opportunity costs

D.Relevant costs and opportunity costs

 

85.State University is considering hiring an outside company for its grounds maintenance. In this regard, State University has received a bid from Mackin Services. Mackin states that its bid of $410,000 will cover all services and planting materials required to “keep State University’s grounds in a condition comparable to prior years.” State University’s cost for grounds maintenance in the preceding year was $412,000 as follows:

 

Salary of three full-time gardeners              $295,000

Plant materials80,000

Fertilizer9,000

Fuel8,000

Depreciation of other equipment              5,000

Depreciation of tractor andmowers                 15,000

Total$412,000

 

If State University hires Mackin, it will be able to sell its other equipment for $30,000, and the three gardeners will be laid off. What is the first year financial impact of hiring the outside company for itsgrounds maintenance?

A.$13,000additional cost

B.$2,000savings

C.$17,000savings

D.$30,000 savings

 

86.State University is considering hiring an outside company for its grounds maintenance. In this regard, State University has received a bid from Mackin Services. Mackin states that its bid of $410,000 will cover all services and planting materials required to “keep State University’s grounds in a condition comparable to prior years.” State University’s cost for grounds maintenance in the preceding year was $412,000 as follows:

 

Salary of three full-time gardeners              $295,000

Plant materials80,000

Fertilizer9,000

Fuel8,000

Depreciation of other equipment              5,000

Depreciation of tractor andmowers                 15,000

Total$412,000

 

If State University hires Mackin, it will be able to sell its other equipment for $30,000, and the three gardeners will be laid off. What will savings be in the second year?

A.$13,000additional costs

B.$2,000savings

C.$7,000savings

D.$30,000 savings

 

87.              Sanders Toys is beginning to manufacture Bungey Wagons.The product will be sold to toy store chains for $12 each. Management allocates $120,000 of fixed manufacturing overhead costs to Bungey Wagons. The manufacturing cost for each wagon at the expected production of 10,000 wagons is as follows:

 

Direct material              $ 13.00

Direct labor              4.00

Overhead ($1.20 fixed and $2.00 variable)                  3.20

Total              $20.20

 

The company has contacted a number of suppliers to determine whether it is better to buy or manufacture the wheels. The lowest quote for a set of 4 wheels needed for each wagon is$3.15. It is estimated that purchasing the wheels from a supplier will save 10 percent of direct materials, 20 percent of direct labor, and 15 percent of variable overhead. Sanders Toys’ manufacturing space is highly constrained. By purchasing the wheels, the company will not have to lease additional manufacturing space that currently cost $8,000 per year. What is the incremental cost or benefit of buying the wheels as opposed to making them?

A.$500 net benefit

B.$7,500 net cost

C.$14,500 net cost

D.None of these answer choices are correct.