Question :
88.Hanson Sports has three product lines: footballs, basketballs, and bats. : 1302791
88.Hanson Sports has three product lines: footballs, basketballs, and bats. Common costs are allocated based on relative sales. A product line income statement for the year ended December 31, 2014 follows:
Footballs Basketballs Bats Total
Sales$600,000$800,000$400,000$1,800,000
Cost of goods sold260,000 400,000 230,000 890,000
Gross margin340,000400,000170,000910,000
Less other variable costs85,000120,000 80,000285,000
Contribution margin255,000280,00090,000625,000
Less direct salaries50,00060,00045,000155,000
Less common fixed costs85,000100,000 55,000240,000
Net income$120,000 $120,000 ($10,000) $ 230,000
Since the profit for bats is relatively low, the company is considering dropping this product line. What is the incremental effect of dropping bats?
$185,000
($45,000)
$240,000
D.$280,000
*89.The theory of constraints seeks to
A.improve throughput in all departments.
B.improve throughput in the department with the binding constraint.
C.create more constraints.
D.sell at the split-off point.
*90.As it pertains to the theory of constraints, inspections should be conducted
A.after the process with the binding constraint.
B.during the process with the binding constraint.
C.before the work is transferred to a constrained department.
D.without regard to the binding constraint.
*91.In theory of constraints, what does “break the binding constraint” mean?
A.Improve the process that was the binding constraint.
B.Improve all processes simultaneously.
C.Make sure that the items made in the constrained process yield the highest contribution margin.
D.Make across-the-board cuts to all processes that are binding.
*92.When operating in a constrained environment, which products should be produced?
A.Those with the highest contribution margin per unit
B.Those with the highest contribution margin per unit of the constrained process
C.Those with the highest selling price
D.Those with the lowest allocated joint cost
93.Zanatech’s market for its remote control has changed significantly, and Zanatech has had to drop the selling price per unit from $45 to $38. There are some units in the work in process inventory that have costs of $30 per unit associated with them. Zanatech can sell these units in their current state for $22 each. It will cost Zanatech $11 per unit to rework these units so that they can be sold for $38 each. Which of the following is not a relevant value in this problem?
A.$22
B.$30
C.$38
D.$8
94.Zanatech’s market for its remote control has changed significantly, and Zanatech has had to drop the selling price per unit from $45 to $38. There are some units in the work in process inventory that have costs of $30 per unit associated with them. Zanatech can sell these units in their current state for $22 each. It will cost Zanatech $11 per unit to rework these units so that they can be sold for $38 each. How much is the financial impact if the units are processed furthur?
A.$5 per unit profit
B.$16 per unit profit
C.$3 per unit loss
D.$12 per unit loss
95.Zanatech’s market for its remote control has changed significantly, and Zanatech has had to drop the selling price per unit from $45 to $38. There are some units in the work in process inventory that have costs of $30 per unit associated with them. Zanatech can sell these units in their current state for $22 each. It will cost Zanatech $11 per unit to rework these units so that they can be sold for $38 each. Which of the following is the amount of sunk costs in this problem?
A.$30 per unit
B.$11 per unit
C.$38 per unit
D.$15 per unit
96.Zanatech’s market for its remote control has changed significantly, and Zanatech has had to drop the selling price per unit from $45 to $38. There are some units in the work in process inventory that have costs of $30 per unit associated with them. Zanatech can sell these units in their current state for $22 each. It will cost Zanatech $11 per unit to rework these units so that they can be sold for $38 each.A new employee looks at the analysis and exclaims, “We’ll lose money with either of these alternatives! Let’s just throw these units in the trash!” What effect will this option have on net income?
A.Profit will decrease by $45 per unit for each unit discarded.
B.Profit will decrease by $30 per unit for each unit discarded.
C.Profit will increase by $11 per unit since the completion costs will not have to be incurred.
D.Profit will decrease by $5 per unit for each unit discarded.
97.Reason Food Store has 4,000 pounds of raw pork approaching its expiration date. Each pound has a cost of $4.50. The pork could be sold ‘as is’ for $3.00 per pound to the dog food processing plant, or roasted and sold in the deli. The cost of roasting the pork willbe $2.80 per pound and each pound could be sold for $6.50. What should be done with the pork and why?
A.The pork should be thrown away since there will be a loss with each of the other alternatives.
B.The pork should be processed further since the sales price increases by $3.50 per pound and the cost only increases by $2.80 per pound.
C.The pork should be sold ‘as is’ since there is no reason to put more costinto a productthat is already selling below its $4.50 cost.
D.It does not matter which option is undertakensince all alternatives result in a loss.
