Question :
71. A company’s unit costs based 100,000 units are:
Variable costs$75
Fixed : 1311771
71. A company’s unit costs based on 100,000 units are:
Variable costs$75
Fixed costs30
The normal unit sales price per unit is $165. A special order from a foreign company has been received for 5,000 units at $135 a unit. In order to fulfill the order, 3,000 units of regular sales would have to be foregone.
The incremental profit (loss) from accepting the order would be
a.$30,000.
b.$(150,000).
c.$180,000.
d.$(90,000).
72. Able Company’s unit manufacturing cost is:
Variable Costs$50
Fixed Costs25
A special order for 2,000 units has been received from a foreign company. The unit price requested is $55. The normal unit price is $80. If the order is accepted, unit variable costs will increase by $2 for additional freight costs. If the order is accepted, incremental profit (loss) will be
a.$(46,000).
b.$6,000.
c.$(40,000).
d.$10,000.
73. In the analysis concerning the acceptance or rejection of a special order, which items are relevant?
a.Variable costs only
b.Fixed costs only
c.Variable costs and fixed costs
d.Variable costs and unavoidable costs
74. What of the following would not be relevant in a make-or-buy decision?
a.Unavoidable variable costs
b.Incremental fixed costs
c.Opportunity costs
d.Avoidable fixed cost
75. Which of the following is not a qualitative factor to be considered in a make-or-buy decision?
a.Possible lost jobs from buying outside
b.Supplier’s ability to satisfy quality standards
c.Incremental benefit from buying outside
d.Supplier’s ability to meet production schedule
76. Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent:
Direct materials$8,400
Direct labor11,250
Variable overhead12,600
Fixed overhead16,200
An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit.
If Clemente accepts the offer, by how much will net income increase (decrease)?
a.$3,750
b.$19,950
c.$(8,850)
d.$(2,850)
77. Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent:
Direct materials$8,400
Direct labor11,250
Variable overhead12,600
Fixed overhead16,200
An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit.
If Clemente could avoid $3,000 of fixed overhead by accepting the offer, net income would increase (decrease) by
a.$750.
b.$(5,850).
c.$(3,150).
d.$6,750.
78. Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent:
Direct materials$8,400
Direct labor11,250
Variable overhead12,600
Fixed overhead16,200
An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit.
If Clemente accepts the offer, it could use the production capacity to produce another product that would generate additional income of $3,600. The increase (decrease) in net income from accepting the offer would be
a.$150.
b.$7,350.
c.$(150).
d.$(3,600).
79. Ortiz Co. produces 5,000 units of part A12E. The following costs were incurred for that level of production:
Direct materials$ 55,000
Direct labor160,000
Variable overhead75,000
Fixed overhead175,000
If Ortiz buys the part from an outside supplier, $40,000 of the fixed overhead is avoidable.
What is the relevant cost per unit of part A12E?
a.$58
b.$85
c.$93
d.$66
80. Ortiz Co. produces 5,000 units of part A12E. The following costs were incurred for that level of production:
Direct materials$ 55,000
Direct labor160,000
Variable overhead75,000
Fixed overhead175,000
If Ortiz buys the part from an outside supplier, $40,000 of the fixed overhead is avoidable.
If the outside supplier offers a unit price of $68, net income will increase (decrease) by
a.$(10,000).
b.$125,000.
c.$(50,000).
d.$85,000.
