Question : 41. Mountaineer Products manufactures two types of tents: single-wall and double-wall. : 1295618

41. Mountaineer Products manufactures two types of tents: single-wall and double-wall. Selected data related to each type of tent is as follows: 

Single-wall

  Double-wall 

Sales price

$250  

$375  

Direct materials

25

50

Direct labor

20

40

Variable overhead

10

15

Machine hours

  2

  3

Total fixed overhead is $150,000. Most of the manufacturing process is done on specialized machines. For the upcoming year, there is a maximum of 9,000 machine hours available. Management believes there is sufficient demand for 3,000 single-wall and 4,000 double-wall tents each year. Refer to the Mountaineer Products information above. If the company maximizes profits, what is the maximum contribution margin for the upcoming year? A. $232,500B. $382,500C. $705,000D. $855,000

42. Tilton Food Warehouse Club sells food and other items in bulk to its members. Tilton is very selective in the products it sells because of limited shelf space. It has been asked by a canned vegetables manufacturer to consider adding three of its canned food items. The following information is available regarding each of the possible canned food items: 

Item #1

Item #2

Item #3

Sales price per unit

$3.50

$4.50

$7.00

Cost to purchase

  1.25

  2.00

  3.00

Units per foot of shelf space

3

2

1

Assuming that there is unlimited demand for all items, if Tilton has 15 feet of shelf space available, which of the following statements is true if they wish to maximize profits? A. Tilton should sell only item #1.B. Tilton should sell only item #2.C. Tilton should sell only item #3.D. Tilton should sell an equal amount of each item.

43. If a company is faced with a limited resource, which of the following is not a feasible option for alleviating the constraint? A. Focusing on products that require less use of the resource.B. Increasing the capacity of the limited resource.C. Reducing the use of the resource in production.D. Ignoring the constraint.

44. The theory of constraints: A. is a management tool used to determine whether or not a company should accept a special order.B. identifies bottlenecks in the production process.C. identifies fixed overhead costs in the production process.D. is a management tool used for deciding whether a product should be sold “as is” or processed further.

45. In the production process, bottlenecks: A. maximize profits.B. maximize the use of scarce resources.C. limit throughput.D. minimize the total cost of a product.

46. In deciding whether to sell a product “as is” or process it further, which of the following pieces of information would not be relevant to the decision? A. Costs of further processing.B. Costs incurred up to the decision point.C. Sales price if processed further.D. Customer demand with further processing.

47. In deciding whether to sell a product “as is” or process it further, which of the following costs are relevant to the decision? A. Costs incurred up to the decision point.B. Costs incurred to process further.C. Only overhead costs.D. Direct materials and direct labor costs only.

48. In a sell “as is” or process further decision, if the incremental revenue of additional processing is greater than the incremental cost of additional processing, then: A. it is less profitable to process further.B. it is more profitable to process further.C. total fixed costs have increased.D. total product costs have decreased.

49. Carolina Potato Inc. currently sells cut sweet potatoes for $.85 per can. The cost of producing the sweet potatoes is $.18 per can. Carolina Potato is considering starting a line of mashed sweet potatoes. The additional processing costs would be $.06 per can and each can would sell for $.95. Which of the following pieces of information is not relevant to the decision to sell “as is” or process further? A. $.06 additional processing costB. $.18 production costC. $.95 sales priceD. demand for pureed sweet potatoes

50. Hannah’s Homemade Cookies produces and sells delicious shortbread cookies. The cost of producing a bag of cookies is $.65 and the bag sells for $3.75. Hannah is considering processing all the cookies further by dipping them in chocolate. The additional processing costs would be $.50 per bag and the sales price of the chocolate-dipped cookies would be $4.20 per bag. If Hannah can sell 5,000 bags of either type of cookie per year, which of the following statements is true if she chooses to process the cookies further? A. Net income would increase by $2,250 per year.B. Net income would decrease by $2,500 per year.C. Net income would decrease by $250 per year.D. Net income would increase by $15,250 per year.