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examchap11 - Folk Exam Questions - Chapter 11 1. A study...

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Folk Exam Questions - Chapter 11 1. A study has been conducted to determine if one of the departments of Marigold Company should be discontinued. The contribution margin in the department is $150,000 per year. Fixed expenses charged to the department are $195,000 per year. It is estimated that $120,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, Lucy's overall net operating income would decrease by how much? Solution: Contribution margin that would be lost if department is discontinued $(150,000) Less fixed costs that can be avoided if department is discontinued 120,000 Net advantage (disadvantage) $ (30,000) 2. Bushen Company produces 3,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: Variable manufacturing cost $36 Fixed manufacturing cost 27 Unit product cost $63 The part can be purchased from an outside supplier at $60 per unit. If the part is
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This note was uploaded on 04/06/2012 for the course 10 275 taught by Professor Sahay during the Summer '11 term at Rutgers.

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examchap11 - Folk Exam Questions - Chapter 11 1. A study...

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