Chapter 07 Inclass quiz_SOLN

Chapter 07 Inclass quiz_SOLN - Acc 200P Name: _ Lab Section...

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Acc 200P Name: ________________________ Lab Section #_________________ Chapter 7 SOLUTION Problem I: Heavenly Desserts makes special order cakes. Normally, each cake sells for $70 each. Variable costs per cake are $15 and fixed costs per cake are $10 when 100 cakes are sold each month. The company has been approached by a local charity to make five special order cakes for $30 each. Assuming the company has the excess capacity, what would be the increase or decrease in net income if the special order were accepted? Answer: _ $75 increase Incremental Revenue (5 x $30) $ 150 Increment Costs (5 x $15) (75) Incremental Profit $ 75 Problem II : Clayton Products manufactures a variety of ergonomic household tools including a cordless weed eater. The weed eater comes with a battery recharger. Currently, the company manufactures its own recharger for the weed eater with the following unit costs when 10,000 rechargers are produced each year: Direct materials $10.00 per unit Direct labor $12.00 per unit
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Chapter 07 Inclass quiz_SOLN - Acc 200P Name: _ Lab Section...

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