Multiple_Choice_Quiz_Ch13

Multiple_Choice_Quiz_Ch13 - 1 The following are the Mishra...

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The following are the Mishra Company's unit costs of making and selling an item at a volume of 30,000 units per month (which represents the company's capacity): Manufacturing: Direct materials $3.00 Direct labor 6.00 Variable overhead 1.00 Fixed overhead 2.00 Selling and administrative: Variable 4.00 Fixed 5.00 Assume the company has 300 units left over from last year which have small defects and which will have to be sold at a reduced price as scrap. This would have no effect on the company's other sales. The variable selling and administrative costs would have to be incurred to sell the defective units. What cost is relevant as a guide for setting a minimum price on these defective units? A) $4 per unit B) $9 per unit C) $16 per unit D) $18 per unit 2 The Auslander Company has 1,600 obsolete calculators that are carried in inventory at a total cost of $106,800. If these calculators are upgraded at a total cost of $40,000, they can be sold for a total of $120,000. As an alternative, the calculators can be sold in their present condition for $44,800. The sunk cost in this situation is: A) $0 B) $40,000. C) $44,800. D) $106,800. 3
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This document was uploaded on 05/04/2009.

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Multiple_Choice_Quiz_Ch13 - 1 The following are the Mishra...

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