q13 - 1 WP Company produces products X Y and Z from a...

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1. WP Company produces products X, Y, and Z from a single raw material input in a joint production process. Budgeted data for the next month is as follows: X Y Z Units produced . 1,500 2,000 3,000 Per unit sales value at split-off $19 $21 $24 Added processing costs per unit $ 7 $7.50 $ 7 Per unit sales value if processed further . $29 $29 $30 The cost of the joint raw material input is $149,000. Which of the products should be processed beyond the split-off point? X_ Y_ Z_ A) yes yes no B) no yes no C) yes no yes D) no yes yes 2. The manufacturing capacity of Jordan Company's facilities is 30,000 units a year. A summary of operating results for last year follows: Sales (18,000 units @ $100) $1,800,000 Variable costs 990,000 Contribution margin 810,000 Fixed costs 495,000 Net operating income $ 315,000 aaaaaaaa A foreign distributor has offered to buy 15,000 units at $90 per unit next year. Jordan expects its regular sales next year to be 18,000 units. If Jordan accepts this offer and rejects some business from regular customers so as not to exceed capacity, what would be the total net operating income next year? (Assume that the total fixed costs would be the same no matter how many units are produced and sold.) A) $390,000. B) $705,000. C) $840,000. D) $855,000. 3. The SP Company makes 40,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $5.50 Direct labor $5.60 Variable factory overhead $4.75 Page 1
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Fixed factory overhead $4.45 An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Company for this motor is $18. If SP Company decides not to make the motors, there would be no other use for the production facilities and total fixed factory overhead costs would not change. If SP Company decides to continue making the motor, how much higher or lower would net income be than if the
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q13 - 1 WP Company produces products X Y and Z from a...

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