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Multiple Choice Quiz_Chapter4 -...

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Multiple Choice Quiz (See related pages) 1 Samson Company manufactures 5,000 units of a special bolt assembly each year for use in its own production. The annual costs of  this assembly are:  Bolt, Inc. has offered to sell Samson 5,000 units of the assembly for $15 per unit.  If Samson accepts the offer, part of the plant used to currently manufacture the part could be rented to another company at an  annual rental of $10,000. Additionally, $2 per unit of the fixed overhead applied to the assembly would be totally eliminated. Should  Samson accept the offer, and why? A) No, because it would be $20,000 cheaper to make the part. B) Yes, because it would be $25,000 cheaper to buy the part. C) No, because it would be $10,000 cheaper to make the part. D) Yes, because it would be $5,000 cheaper to buy the part. E) None of the above. 2 A cost that has been incurred that cannot be changed by present or future decisions is called a: A) Differential cost B) Opportunity cost C) Marginal cost D) Sunk cost E) None of the above 3 Pesco Company, a manufacturer of candy jars, budgeted sales of 500,000 jars at $10 each in 2006. Variable manufacturing costs  are $4 per unit, and fixed manufacturing costs are $2.50 per unit. Pesco received a special order offering to buy 50,000 jars for $6  each. Pesco has sufficient plant capacity to manufacture this order. However, additional overtime labor costs of $1.00 per jar would  be required to produce the jars. No other costs would be incurred as a result of accepting the order. What would be the effect on  operating income if the special order was accepted, assuming the order did not effect normal sales? A) $50,000 increase B) $75,000 decrease C) $100,000 increase D) $175,000 decrease E) None of the above 4 Monroe Corporation makes three products: a standard model, a deluxe model and a luxury model. The financial statements of the  products are as follows: 
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If the Deluxe product line was discontinued, all variable costs for that line could be avoided, and $10,000 of the salaries associated  with the deluxe model could be avoided. The other fixed costs would continue no matter what the decision. What would be the effect 
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