Question : 63.A company has the choice of either selling 1,000 defective : 1236828

63.A company has the choice of either selling 1,000 defective units as scrap or rebuilding them. The company could sell the defective units as they are for $4.00 per unit. Alternatively, it could rebuild them with incremental costs of $1.00 per unit for materials, $2.00 per unit for labor, and $1.50 per unit for overhead, and then sell the rebuilt units for $8.00 each. What should the company do?    

A.Sell the units as scrap.

B.Rebuild the units.

C.It does not matter because both alternatives have the same result.

D.Neither sell nor rebuild because both alternatives produce a loss. Instead, the company should store the units permanently.

E.Throw the units away.

64.A company has the choice of either selling 600 defective units as scrap or rebuilding them. The company could sell the defective units as they are for $2.00 per unit. Alternatively, it could rebuild them with incremental costs of $0.60 per unit for materials, $1.00 per unit for labor, and $0.80 per unit for overhead, and then sell the rebuilt units for $5.00 each. What should the company do?    

A.Sell the units as scrap.

B.Rebuild the units.

C.It does not matter because both alternatives have the same result.

D.Since both alternatives produce a loss, store the units in hopes of a better price later.

E.Throw the units away.

65.Ahngram Corp. has 1,000 defective units of a product that cost $3 per unit in direct costs and $6.50 per unit in indirect cost when produced last year. The units can be sold as scrap for $4 per unit or reworked at an additional cost of $2.50 and sold at full price of $12. The incremental net income (loss) from the choice of reworking the units would be:    

A.$5,500.

B.$0.

C.($2,500).

D.$10,500.

E.$2,500.

66.Benjamin Company had the following results of operations for the past year: 

A.Increase by $30,000.

B.Increase by $6,000.

C.Decrease by $6,000.

D.Increase by $5,200.

E.Increase by $4,300.

67.Lattimer Company had the following results of operations for the past year: 

A.$2,000 loss.

B.$8,250 loss.

C.$3,750 profit.

D.$3,250 loss.

E.$5,000 profit.

68.Markson Company had the following results of operations for the past year: 

A.Increase by $3,500.

B.Decrease by $5,650.

C.Decrease by $1,600.

D.Increase by $1,900.

E.Decrease by $5,100.

69.The break-even time (BET) method is a variation of the:    

A.Payback method.

B.Internal rate of return method.

C.Accounting rate of return method.

D.Net present value method.

E.Present value method.

70.The calculation of the payback period for an investment when net cash flow is even (equal) is:    

A.Cost of investment/Annual net cash flow

B.Cost of investment/Total net cash flow

C.Annual net cash flow/Cost of investment

D.Total net cash flow/Cost of investment

E.Total net cash flow/Annual net cash flow

71.Porter Co. is analyzing two projects for the future. Assume that only one project can be selected. 

A.Project Y.

B.Project X.

C.Both X and Y are acceptable projects.

D.Neither X nor Y is an acceptable project.

E.Project Y because it has a lower initial investment.

0$(60,000)$(60,000)

14,000(56,000)

226,000(30,000)

326,000(4,000)

420,00016,000

72.Porter Co. is analyzing two projects for the future. Assume that only one project can be selected. 

A.2.00.

B.3.83.

C.3.50.

D.2.83.

E.4.00.