307
228.
Correct answer a.
If Dayton sold 30,000 units, the net income would be $24,000.
Contribution
$90,000
[30,000 x ($10 - $7)]
Fixed costs
42,000
Gross profit
48,000
Tax @50%
24,000
Net income
$24,000
229.
Correct answer b.
If Raymund installs the automated process, the monthly operating income would be
$10,000 as shown below.
Reduction in variable costs: ($50,000 ÷ 5,000) = $10 - $5 = $5
Sales
$100,000
Variable manufacturing
25,000
($5 x 5,000)
Variable selling
15,000
Contribution
60,000
Fixed manufacturing
46,000
Fixed selling
4,000
Operating income
$
10,000
230.
Correct answer c.
The only combination of factors that is correct is a variable cost ratio of 32% and
operating income of $9,600,000.
Variable cost ratio: $60 – ($60 x .2) = $48 ÷ $150 = 32%
Contribution margin
$17,850,000
[175,000 x ($150 - $48)]
Fixed costs*
8,250,000
Operating income
$
9,600,000
*Current fixed costs $9,000 ($60 x 150,000) - $750,000 eliminated
231.
Correct answer b.
The relevant contribution margins per machine hour are Product A $18.50 and
Product B $16.00 as shown below.
Product A:
$100 - $53 - $10 = $37 ÷ 2 hours =
$18.50
Product B:
$80 - $45 - $11
= $24 ÷ 1.5 hours =
$16.00
232.
Correct answer a.
Lark should make 30,000 units of Product A, 14,000 units of Product B (utilizing the
remaining machine hours), and outsource 6,000 units of Product B because this alternative makes the
greatest contribution as shown below.
Hours:
(30,000 A units x 3 hours) = 90,000 hours
160,000 hours – 90,000 hours = 70,000 hours remaining
70,000 ÷ 5 hours for B unit = 14,000 units of Product B
Contribution:
=
[($75 - $30) x 30,000] + [($125 - $48) x 14,000] + [($125 - $60) x 6,000]
=
$1,350,000 + $1,078,000 + $390,000
=
$2,818,000