Question

QUESTION 42

1. Wheel Company makes a product, K9. It has a production capacity of 1,000 units, and it can sell 900 units in the regular market. The regular selling price is $60 each. Wheel has received a request from Tom for a special order of 100 units of K9. This special order does not incur any variable selling cost.  The following is the per-unit cost information:

   Variable manufacturing	$18
   Fixed manufacturing	$20*
   Unit manufacturing cost	$38
   Variable selling	$4
   Fixed selling	$8*
   Unit selling cost	$12
   Total cost	$50

   * based on production and sales of 1,000 units

   Tom wants to buy 100 units at a special price of 35 per unit. If Wheel accepts this order, Wheel’s income will:

   	A.	increase by $900
   	B.	increase by $1,700
   	C.	decrease by $1,500
   	D.	decrease by $1,100
   	E.	increase by $1,300

2 points   

QUESTION 43

1. Use the information given in the previous question. But assume that Wheel can sell all of 10,000 units in the regular market. Wheel does not want the company's profit to decline by accepting the order from Tom. Then, Wheel has to charge at least _____ to Tom for each unit of K9.

   	A.	$46
   	B.	$60
   	C.	$18
   	D.	$24
   	E.	$56

2 points   

QUESTION 44

1. Faxaco has the following cost information regarding a component to be used in making its product, fax machine. The company has a capacity of manufacturing the component up to 900 units.  The manufacturing costs for making 100 units are:   

   Direct materials and labor     $1,800   

   Variable overhead $2,600  

   Fixed overhead                                       $9,000

   $13,400

   Of fixed overhead, 60% can be eliminated if the component is not manufactured. If the component is not manufactured, the facilities can be rented for $6,700.  

   An outside vendor, Fast Company has offered to provide Kappa with the component for $150 each. Faxaco is making a Make or Buy decision. Compared to "Make", "Buy" is:

   	A.	$3,300 better
   	B.	$1,500 better
   	C.	$4,900 worse
   	D.	$600 better
   	E.	$1,600 worse

2 points   

QUESTION 45

1. dKristen Company manufactures three products: X, Y, and Z. The demand for each product is 100 units. The selling price, variable expenses, and contribution margin for one unit of each product follow:

   	Product
   	X	Y	Z
   Selling price	$140	$300	$390
   Less variable expenses        (Only Special steel)	50	100	150
   Contribution margin	$90	$200	$240
   Steel need to make 1 unit	1 kg	2 kg	3 kg

   
   The same special steel is used for all three products. 1 kg of the steel costs $50. Kristen can buy up to 400 kgs.

   Assume that Kristen can also buy Product Y from an importer and resell it. The purchase price of Y would be $270 per unit. In this case, in what order does the company have to make the products?

   	A.	Y è Z è X
   	B.	X è Z è Y
   	C.	Z è X è Y
   	D.	X è Y è Z
   	E.	Y è X è Z

2 points   

QUESTION 46

1. Kristen Company manufactures three products: X, Y, and Z. The demand for each product is 100 units. The selling price, variable expenses, and contribution margin for one unit of each product follow:

   	Product
   	X	Y	Z
   Selling price	$140	$300	$390
   Less variable expenses        (Only Special steel)	50	100	150
   Contribution margin	$90	$200	$240
   Steel need to make 1 unit	1 kg	2 kg	3 kg

   
   The same special steel is used for all three products. 1 kg of the steel costs $50.

   Assume that the company has made all units required for X and Y. Now Kristen does not have enough steel remaining to make all 100 units demanded for Z. An outside vendor can furnish Kristen with additional steel at some price. How much is the highest price that Kristen is willing to pay per kg of additional steel?

   	A.	$100
   	B.	$50
   	C.	$150
   	D.	$80
   	E.	$130

2 points   

QUESTION 47

1. Royal Law is a law firm serving many clients. Each client has a unique case. Royal Law would use:

   	A.	variable costing
   	B.	job costing
   	C.	operations costing
   	D.	process costing
   	E.	target costing

2 points   

QUESTION 48

1. Which of the following approaches allocates overhead with the use of a predetermined overhead rate and standard level of activity?

   	A.	actual costing
   	B.	target costing
   	C.	standard costing
   	D.	process costing
   	E.	normal costing

Answer 1

Answer : I have given Answer for 4 question.