Question :
70.A company has already incurred a $55,000 cost in partially : 1258731
70.A company has already incurred a $55,000 cost in partially producing its three products. Their selling prices when partially and fully processed are shown in the following table with the additional costs necessary to finish their processing. Based on this information, should any products be processed further?
ProductUnfinished Selling PriceFinished Selling PriceFurther Processing Costs
A$72$108$35
B8312442
C9414145
A. All of these products should be processed further.
B. None of these products should be processed further.
C. Products A and B should be processed further.
D. Products B and C should be processed further.
E. Products A and C should be processed further.
71.Bandy Corporation owns a machine that manufactures lawn games. Production time for the croquet set is 10 units per hour and for the volley ball game is 8 units per hour. The machine’s capacity is 1,500 hours per year. Both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 4,000 croquet sets and 10,000 volleyball games. Selling prices and variable costs per unit are shown below. Based on this information, what is Bandy Corporation’s most profitable sales mix?
Croquet SetVolleyball Game
Selling price per unit$75$62
Variable costs per unit 42 25
A. 15,000 croquet sets.
B. 12,000 volleyball games.
C. 4,000 croquet sets and 10,000 volleyball games.
D. 4,000 croquet sets and 8,800 volleyball games.
E. 2,500 croquet sets and 10,000 volleyball games.
72.The Mad Hatter Company owns a machine that manufactures two types of chimney caps. Production time is .20 hours for cap A and .40 hours for cap B. The machine’s capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 1,000 units of cap A and 6,000 units of cap B. Selling prices and variable costs per unit are shown below. Based on this information, what is the Mad Hatter’s most profitable sales mix?
Cap ACap B
Selling price per unit$80$60
Variable costs per unit 53 42
A. 10,000 units of cap A.
B. 5,000 units of cap B.
C. 1,000 units of cap A and 5,000 units of cap B.
D. 1,000 units of cap A and 6,000 units of cap B.
E. 1,000 units of cap A and 4,500 units of cap B.
73.What decision rule should be followed when deciding if a business segment should be eliminated?
A. Segments generating a net loss should always be eliminated.
B. Segments with revenues that are more than avoidable expenses should be considered for elimination.
C. Segments with revenues that are more than unavoidable expenses should be considered for elimination.
D. Segments with revenues that are less than avoidable expenses should be considered for elimination.
E. Segments with revenues that are less than unavoidable expenses should be considered for elimination.
74.Rocko Inc. has a machine with a book value of $50,000 and a five-year remaining life. A new machine is available at a cost of $85,000 and Rocko can also receive $38,000 for trading in the old machine. The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life. Should the machine be replaced?
A. Yes, because income will increase by $14,000 per year.
B. Yes, because income will increase by $23,000 in total.
C. No, because the company will be $23,000 worse off in total.
D. No, because the income will decrease by $14,000 per year.
E. Rocko will be not be better or worse off by replacing the machine.
