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MULTIPLE_CHOICE_EXAMPLES_CHAPTER_11_Solutions

# MULTIPLE_CHOICE_EXAMPLES_CHAPTER_11_Solutions -...

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MULTIPLE CHOICE EXAMPLES CHAPTER 11 20. Gill, Inc. is considering using stocks of an old raw material in a special project. The special project would require all 80 kilograms of the raw material that are in stock and that originally cost the company \$500 in total. If the company were to buy new supplies of this raw material on the open market, it would cost \$7.50 per kilogram. However, the company has no other use for this raw material and would sell it at the discounted price of \$5.75 per kilogram if it were not used in the special project. The sale of the raw material would involve delivery to the purchaser at a total cost of \$30.00 for all 80 kilograms. What is the relevant cost of the 80 kilograms of the raw material when deciding whether to proceed with the special project? A) \$430 B) \$480 C) \$500 D) \$460 Ans: A Discounted price of \$5.75 per kg x 80kg = \$460 \$460 - \$30 delivery price = \$430 Use the following information to answer 2-3 The following are the DShen Company’s unit costs of making and selling an item at a volume of 1,000 units per month (which represents the company’s capacity): Manufacturing: Direct Materials… \$1.50 Direct Labor… \$1.00 Variable overhead… \$1.00 Fixed overhead… \$0.80 Selling and Administrative… Variable… \$3.00 Fixed… \$1.75 Present sales amount to 800 units per month. An order has been received from a customer in a

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MULTIPLE_CHOICE_EXAMPLES_CHAPTER_11_Solutions -...

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