Question : 101.Bell’s Shop can make 1,000 units of a necessary component : 1311774

 

 

101.Bell’s Shop can make 1,000 units of a necessary component with the following costs:

Direct Materials$24,000

Direct Labor6,000

Variable Overhead3,000

Fixed Overhead?

The company can purchase the 1,000 units externally for $39,000. The unavoidable fixed costs are $2,000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between making or buying the part. What are the fixed overhead costs of making the component?

a.$8,000

b.$6,000

c.$4,000

d.Cannot be determined.

 

 

102.Ruth Company produces 1,000 units of a necessary component with the following costs:

Direct Materials$34,000

Direct Labor15,000

Variable Overhead9,000

Fixed Overhead10,000

 

Ruth Company could avoid $6,000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Ruth Company would accept to acquire the 1,000 units externally?

a.$58,000

b.$64,000

c.$59,000

d.$62,000

 

 

 

103.Ruth Company produces 1,000 units of a necessary component with the following costs:

Direct Materials$27,000

Direct Labor16,000

Variable Overhead4,000

Fixed Overhead7,000

 

None of Ruth Company’s fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $8,000 if the components were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Ruth Company would be willing to accept to acquire the 1,000 units externally?

a.$46,000

b.$58,000

c.$51,000

d.$55,000

 

 

104.Fornelli, Inc. can produce 100 units of a component part with the following costs:

 

Direct Materials$15,000

Direct Labor6,500

Variable Overhead16,000

Fixed Overhead11,000

 

If Fornelli, Inc. can purchase the units externally for $40,000, by what amount will its total costs change?

a.An increase of $40,000

b.An increase of $2,500

c.An increase of $8,500

d.A decrease of $11,000

 

 

105.Fornelli, Inc. can produce 100 units of a component part with the following costs:

 

Direct Materials$15,000

Direct Labor6,500

Variable Overhead16,000

Fixed Overhead11,000

 

If Fornelli, Inc. can purchase the component part externally for $44,000 and only $4,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

a.Make and save $500

b.Buy and save $500

c.Make and save $2,500

d.Buy and save $6,500

 

 

 

106.Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:

Direct Materials$13,000

Direct Labor15,000

Variable Overhead3,000

Fixed Overhead7,000

 

Crigui could avoid $4,000 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 60,000 units externally, what is the maximum external price that Crigui would expect to pay for the units?

a.$34,000

b.$31,000

c.$38,000

d.$35,000

 

 

107.Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:

Direct Materials$13,000

Direct Labor15,000

Variable Overhead3,000

Fixed Overhead7,000

 

None of Crigui’s fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crigui would be willing to accept to acquire the 60,000 units externally?

a.$38,000

b.$34,000

c.$35,000

d.$42,000

 

 

108.Tasty Bites produces corn chips. The cost of one batch is below:

Direct materials$18

Direct labor13

Variable overhead11

Fixed overhead14

An outside supplier has offered to produce the corn chips for $30 per batch. How much will Tasty Bites save if it accepts the offer?

a.$15 per batch

b.$12 per batch

c.$26 per batch

d.$1 per batch

 

 

109.NF Toy Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and NF Toy would sell it for $52. The cost to assemble the product is estimated at $17 per unit and the company believes the market would support a price of $68 on the assembled unit. What decision should NF Toy make?

a.Sell before assembly, the company will be better off by $1 per unit.

b.Sell before assembly, the company will be better off by $16 per unit.

c.Process further, the company will be better off by $23 per unit.

d.Process further, the company will be better off by $11 per unit.

 

 

110.Moreland Clean Company spent $8,000 to produce Product 89, which can be sold as is for $10,000, or processed further incurring additional costs of $3,000 and then be sold for $14,000. Which amounts are relevant to the decision about Product 89?

a.$8,000, $10,000, and $14,000

b.$8,000, $3,000, and $14,000

c.$10,000, $3,000, and $14,000

d.$8,000, $10,000, $3,000 and $14,000