1. Falcon Co. produces a single product. Its normal selling price is $25 per unit. The...

Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $16 per unit. Fixed costs are $20,400 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,320 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated.

If the order is accepted, what would be the impact on net income?

a.decrease of $3,960

b.increase of $8,580

c.increase of $6,600

d.increase of $5,280

Mighty Safe Fire Alarm is currently buying 57,000 motherboards from MotherBoard, Inc. at a price of $64 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $34 per unit; direct labor, $12 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $78,000. Which option should be selected and why?

a.make, $92,910 increase in profits

b.make, $171,000 increase in profits

c.buy, $78,000 more in profits

d.buy, $92,910 more in profits

Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard, Inc. at a price of $65.00 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $32.00 per unit; direct labor, $10.00 per unit; and variable factory overhead, $16.00 per unit. Fixed costs for the plant would increase by $75,000. Which option should be selected and why?

a.buy, $75,000 more in profits

b.make, $350,000 increase in profits

c.make, $275,000 increase in profits

d.buy, $275,000 more in profits

The following information is available from the current period financial statements:

Net income	$107,693
Depreciation expense	25,523
Increase in accounts receivable	16,204
Decrease in accounts payable	27,473

The net cash flow from operating activities using the indirect method is

a.$38,493

b.$107,693

c.$89,539

d.$176,893

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Expert Solution

ekkarill92 answered 1 year ago

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