Cengage_Now_Assignment_10_Solutions - Cengage Now...

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Cengage Now Assignment 10 Solutions 1. (MC 7-3) Answer: C 2. (MC 7-8) Answer: C 3. (MC 7-11) Answer: C Standard Deluxe CM per unit $ 125 $200 ÷ tuning hours per unit ÷ 2 ÷ 4 CM per tuning hour $62.50 $ 50 4. (MC 7-12) Answer: C 5. (E 7-4) The relevant costs of making the product are the variable costs of $47 per unit. If Switzer buys the units for $50, the company can only avoid the $47 of relevant variable costs. If Switzer accepts the offer and buys the part for $50, income will decrease by $3,000 (1,000 units x $3.00 in additional cost per unit). 6. (E 7-6) If painted rockers are dropped, overall operating profit will not be affected as follows: Decrease in overall CM ($15,000) Decrease in FC * 15,000 Overall decrease in operating income $ 0 * A decrease in FC equates to an increase in profit Since the contribution margin lost is exactly equal to the avoidable fixed costs, overall profit will not change.
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7. (E 7-10) Based on the computations below, DePaulis should finish the chairs since the
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Cengage_Now_Assignment_10_Solutions - Cengage Now...

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