Solomon Corporation is considering the elimination of one of its segments. The segment incurs the following fixed costs. If the segment is eliminated, the building it uses will be sold.
Required
Determine the amount of avoidable cost associated with the segment.
| Advertising expense | $ | 89,000 | |
| Supervisory salaries | 178,000 | ||
| Allocation of companywide facility-level costs | 54,000 | ||
| Original cost of building | 121,000 | ||
| Book value of building | 54,000 | ||
| Market value of building | 87,000 | ||
| Maintenance costs on equipment | 82,000 | ||
| Real estate taxes on building | 12,000 | ||
In: Accounting
What is cost of production? Explain with suitable example.
In: Economics
Define discretionary and committed fixed cost with example.
In: Accounting
1–5 What effect does an increase in the activity level have on—
a. Average fixed costs per unit?
b. Variable costs per unit?
c. Total fixed costs?
d. Total variable costs?
1–6 Define the following terms: (a) cost behavior and (b) relevant range.
1–7 What is meant by an activity base when dealing with variable costs? Give several
examples of activity bases.
1–8 Managers often assume a strictly linear relationship between cost and the level of activity.
Under what conditions would this be a valid or invalid assumption?
In: Accounting
What does the concept of “opportunity cost” mean?
In: Economics
In: Economics
What are the affects of net income as a realized cost?
In: Accounting
In: Nursing
examples of cost improvement projects in a nursing unit
In: Nursing
Which of the following is not an example of a cost that varies in total as the number of units produced changes?
a.Electricity per KWH to operate factory equipment
b.Supervisor salary
c.Wages of assembly worker
d.Direct materials cost
Which of the following is true when using the concept of contribution margin in managerial decision making?
a.Contribution margin is rarely useful for providing insight into the profit potential of a company.
b.The contribution margin ratio is most useful when the increase or decrease in sales volume is measured in sales dollars.
c.The unit contribution margin is most useful when the increase or decrease in sales volume is measured in sales dollars.
d.The contribution margin ratio is not helpful in developing business strategies.
Total direct materials costs are $127,500, fixed costs are $75,000, and units produced are 15,000. What is the direct materials cost per unit?
a.$8.50
b.$3.50
c.$5.00
d.$13.50
Beachside Co. sells two products: Skis and Snorkels. Last year,
Beachside sold 12,600 units of Skis and 23,400 units of Snorkels.
Related data are as follows:
| Product | Unit Selling Price |
Unit Variable Cost |
Unit Contribution Margin |
|||
| Skis | $120 | $80 | $40 | |||
| Snorkels | 80 | 60 | 20 | |||
What was Beachside Co.'s sales mix last year?
a.30% Skis; 70% Snorkels
b.60% Skis; 40% Snorkels
c.35% Skis; 65% Snorkels
d.12% Skis; 28% Snorkels
The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents the
a.maximum possible operating loss.
b.total fixed costs.
c.point where total sales equal total costs.
d.maximum possible operating income.
Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?
a.Direct labor
b.Units of production depreciation on factory equipment
c.Direct materials
d.Factory rent
Target profit
a.is when sales and costs are exactly equal.
b.equals differential costs.
c.can be calculated by modifying the break-even equation.
d.cannot be calculated in cost-volume-profit analysis.
in a service company, the unit of analysis can influence whether costs are defined as
a.selling or administrative.
b.product or period.
__________ is a measure of the relative mix of a business's variable costs and fixed costs, computed as contribution margin divided by operating income.
a.Sales mix
b.Margin of safety
c.Operating leverage
d.Break-even point
The break-even point for a college would likely be measured in number of
a.student credit hours.
b.full-time students.
c.courses offered.
d.part-time students.
If fixed costs are $400,000 and the unit contribution margin is $20, how many units must be sold in order to realize an operating income of $250,000?
a.32,500
b.20,000
c.7,500
d.45,000
Which of the following conditions would cause the break-even point to decrease?
a.Total fixed costs decrease
b.Total fixed costs increase
c.Unit variable cost increases
d.Unit selling price decreases
c.fixed or variable.
d.short-term or long-term.
In: Accounting