Eminem would expect to pay for the units? a. $32,000 b. $29,000 c. $36,000 d. $33,000 None of Eminems fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Eminem would be willing to accept to acquire the 60,000 units externally? a. $36,000 b. $32,000 c. $33,000 d. $40,000 Hungry Bites produces corn chips. The cost of one batch is below: Direct materials Direct labor Variable overhead Fixed overhead $18.00 13.00 11.00 14.00 75. 76. An outside supplier has offered to produce the corn chips for $25 per batch. How much will Hungry Bites save if it accepts the offer? 26 - 14 Test Bank for Accounting Principles, Eighth Edition a. b. c. d. 77. $2.00 per batch $17.00 per batch $31.00 per batch $6.00 per batch PH Toy Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $30 and PH Toy would sell it for $65. The cost to assemble the product is estimated at $21 per unit and the company believes the market would support a price of $85 on the assembled unit. What decision should PH Toy make? a. Sell before assembly, the company will be better off by $1 per unit. b. Sell before assembly, the company will be better off by $20 per unit. c. Process further, the company will be better off by $29 per unit. d. Process further, the company will be better off by $14 per unit. Whisker Clean Company spent $4,000 to produce Product 89, which can be sold as is for $5,000, or processed further incurring additional costs of $1,500 and then be sold for $7,000. Which amounts are relevant to the decision about Product 89? a. $4,000, $5,000, and $7,000 b. $4,000, $1,500, and $7,000 c. $5,000, $1,500, and $7,000 d. $4,000, $5,000, $1,500 and $7,000 Narst Company has old inventory on hand that cost $12,000. Its scrap value is $16,000. The inventory could be sold for $40,000 if manufactured further at an additional cost of $12,000. What should
Narst do? a. Sell the inventory for $16,000 scrap value b. Dispose of the inventory to avoid any further decline in value c. Hold the inventory at its $12,000 cost d. Manufacture further and sell it for $40,000 Market Makeup produces face cream. Each bottle of face cream costs $10 to produce and can be sold for $13. The bottles can be sold as is, or processed further into sunscreen at a cost of $14 each. Market Makeup could sell the sunscreen bottles for $23 each. a. Face cream must be processed further because its profit is $9 each. b. Face cream must not be processed further because costs increase more than revenue. c. Face cream must not be processed further because it decreases profit by $1 each. d. Face cream must be processed further because it increases profit by $3 each. Edmonds Company has old inventory on hand that cost $18,000. Its scrap value is $24,000. The inventory could be sold for $60,000 if manufactured further at an additional cost of $18,000. What should Edmonds do? a. Sell the inventory for $24,000 scrap value b. Dispose of the inventory to avoid any further decline in value c. Hold the inventory at its $18,000 cost d. Manufacture further and sell it for $60,000. 78. 79. 80. 81.
You've reached the end of your free preview.
Want to read all 26 pages?
- Spring '09
- Net Present Value, Incremental Analysis, mC mC mC, MC MC MC MC MC MC MC MC