ACCT 2302 (Ch. 9 Answers) - Chapter 9 Review 1. The...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 9 Review 1. The condensed income statement for a business for the past year is presented as follows: Product F G H Total Sales $300,000 $210,000 $340,000 $850,000 Less variable costs 180,000 190,000 220,000 590,000 Contribution margin $120,000 $ 20,000 $120,000 $260,000 Less fixed costs 50,000 50,000 40,000 140,000 Income (loss) from oper. $ 70,000 $ (30,000 ) $ 80,000 $120,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G? $20,000 decrease 2. A business is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36, including fixed costs, and $28, not including fixed costs. If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? $60,000 cost increase 3. The amount of income that would result from an alternative use of cash is called: opportunity cost 4. Partridge Co. can further process Product J to produce Product D. Product J is currently selling for $21 per pound and costs $15.75 per pound to produce. Product D would sell for $37 per pound and would require an additional cost of $9.25 per pound to produce. What is the differential cost of producing Product D? $9.25 per pound 5. Partridge Co. can further process Product J to produce Product D. Product J is currently selling for $21 per pound and costs $15.75 per pound to produce. Product D would sell for $37 per pound and would require an additional cost of $9.25 per pound to produce. What is the differential revenue of producing Product D? $16 per pound 6. A business is considering a cash outlay of $250,000 for the purchase of land, which it could lease for $36,000 per year. If alternative investments are available which yield an 18% return, the opportunity cost of the purchase of the land is: $45,000 7. A business received an offer from an exporter for 10,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 What is the differential revenue from the acceptance of the offer? $170,000 8. A business received an offer from an exporter for 10,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 What is the differential cost from the acceptance of the offer?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/01/2011 for the course ACCT 2302 taught by Professor Dr. during the Spring '11 term at University of Houston-Victoria.

Page1 / 4

ACCT 2302 (Ch. 9 Answers) - Chapter 9 Review 1. The...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online