GNBExam13 - GNB 12e Practice Exam Chapter 13 Print these pages Answer each of the following questions explaining your answers or showing your work

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GNB 12e Practice Exam – Chapter 13 Print these pages. Answer each of the following questions, explaining your answers or showing your work, as appropriate, and then compare your solutions to those provided at the end of the practice exam. 1. Bazar Company is a small family business that produces wooden plaques and trophies: Plaques Trophies Selling price per unit $18 $15 Variable cost per unit 12 8 Contribution margin per unit $ 6 $ 7 Contribution margin ratio 33% 47% In producing the items, the primary “bottleneck” is due to the fact the company only has one machine, a sander, to sand the wood that is used for the plaques or the trophies. Generally, the wood required for each plaque takes 0.25 hour to sand, while the word required for each trophy takes 0.50 hour to sand. Based on the constraint related to the machine time, which product should be emphasized if only limited machine time is available? 2. A study has been conducted to determine if one of the departments of Sparrow Company should be discontinued. The contribution margin in the department is $150,000 per year. Fixed expenses charged to the department are $130,000 per year. It is estimated that $120,000 of these fixed expenses could be eliminated if the department is discontinued. Part (a) If the department is discontinued, what will be the impact on the company’s overall net operating income? Part (b) Which costs are irrelevant to this decision?
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3. Lavender Company produces 2,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: Variable manufacturing cost $64 Fixed manufacturing cost 36 Unit product cost $100 The part can be purchased from an outside supplier at $80 per unit. If the part is purchased from the outside supplier, two-thirds of the fixed manufacturing costs can be eliminated. Part (a) What costs are irrelevant to this decision?
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This note was uploaded on 11/04/2009 for the course SBA ACC 2302 taught by Professor Ahmedbashir during the Spring '09 term at Al Akhawayn University.

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GNBExam13 - GNB 12e Practice Exam Chapter 13 Print these pages Answer each of the following questions explaining your answers or showing your work

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