Question 7 abc company has the capacity to produce

This preview shows page 5 - 8 out of 10 pages.

Question 7 ABC Company. has the capacity to produce 15,000 lamps each month. Current regular production and sales are 10,000 lamps at a selling price of $15 each. The costs of producing each lamp is: direct materials $5.00 direct labor 3.00 variable overhead 0.75 fixed overhead 1.50 variable selling costs 0.25 fixed selling costs 1.00 ABC Company has received a special order who wants to purchase 6,000 lamps at a reduced price of $10 per lamp. ABC Company has determined that there would be no selling expenses in connection with this special order. Calculate the increase in company profits if ABC Company accepts the special order . = 8.75 = 9.75 $1,500
Question 8 Bowen Company makes two products from a joint production process. Each product may be sold at the split-off point or processed further. Information concerning these products appears below: Product X Product Y Allocated joint costs .................... $25,000 $18,000 Sales value after further processing ..... $47,000 $41,000 Sales value at the split-off point ....... $28,000 $23,000 Additional processing costs .............. $16,000 $17,000 Assume Bowen Company makes all the correct sell or process further decisions. Calculate the net income reported by Bowen Company last year.
Question 9 Veritime Assurance Company provides both automobile and life insurance to its customers. Income statements for the two products for the most recent year appear below: Automobile Insurance Life Insurance Sales revenue ................. $4,000,000 $12,000,000 Variable costs ................. 3,510,000 9,600,000 Contribution margin ............ 490,000 2,400,000 Fixed costs .................... 600,000 700,000 Net income/loss ................ <110,000> 1,700,000 The president of the company is considering dropping the automobile insurance product line. However, some policyholders prefer having their auto and life insurance with the same company, so if automobile insurance is dropped, sales of life insurance will drop by 10%. Assume that $100,000 of the fixed costs assigned to automobile insurance are unavoidable and thus will continue whether or not automobile insurance is dropped. Calculate the

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture