June2017SupportPackage.pdf

# B 12500 c 21591 d 25000 197 cso 2c2b los 2c2e harper

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b. \$125.00. c. \$215.91. d. \$250.00. 197. CSO: 2C2b LOS: 2C2e Harper Products’ cost information for the normal range of output in a month is shown below. Output in units Total Cost 20,000 \$3,000,000 22,500 3,325,000 25,000 3,650,000 What is Harper’s short-run marginal cost? a. \$26. b. \$130. c. \$146. d. \$150.

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218 198. CSO: 2C2b LOS: 2C2e Auburn Products Inc. has compiled the following daily cost information for its manufacturing operation. Output (units) Fixed Cost Variable Cost 0 \$2,000 \$ 0 1 2,000 200 2 2,000 380 3 2,000 550 4 2,000 700 5 2,000 860 6 2,000 1,040 7 2,000 1,250 8 2,000 1,500 Auburn’s marginal cost for the 7th unit is a. \$179. b. \$210. c. \$286. d. \$464. 199. CSO: 2C2b LOS: 2C2e Daily costs for Kelso Manufacturing include \$1,250 in fixed costs and total variable costs are shown below. Unit Output 10 11 12 13 14 15 Cost \$150 \$300 \$480 \$620 \$750 \$900 The marginal cost of the 12th unit is a. \$180.00. b. \$140.00. c. \$104.16. d. \$40.00. 200. CSO: 2C2b LOS: 2C2f The total cost of producing 100 units of a good is \$800. If a firm’s average variable cost is \$5 per unit, then the firm’s a. average fixed cost is \$3. b. total variable cost is \$300. c. marginal cost is \$3. d. marginal cost is \$8.
219 201. CSO: 2C2b LOS: 2C2e Daily sales and cost data for Crawford Industries are shown below. Sales Total Units \$ Costs 20 \$2,000 \$1,200 21 2,090 1,250 22 2,170 1,290 23 2,240 1,330 24 2,300 1,380 25 2,350 1,440 The marginal cost of the 23rd unit is a. \$30.00. b. \$40.00. c. \$50.00. d. \$57.83. 202. CSO: 2C2b LOS: 2C2e Parker Manufacturing is analyzing the market potential for its specialty turbines. Parker developed its pricing and cost structures for their specialty turbines over various relevant ranges. The pricing and cost data for each relevant range are presented below. Units produced and sold 1 - 5 6 - 10 11 - 15 16 - 20 Total fixed costs \$200,000 \$400,000 \$600,000 \$800,000 Unit variable cost 50,000 50,000 45,000 45,000 Unit selling price 100,000 100,000 100,000 100,000 Which one of the following production/sales levels would produce the highest operating income for Parker? a. 8 units. b. 10 units. c. 14 units. d. 17 units.

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220 203. CSO: 2C2c LOS: 2C2h Johnson Company manufactures a variety of shoes, and has received a special one-time-only order directly from a wholesaler. Johnson has sufficient idle capacity to accept the special order to manufacture 15,000 pairs of sneakers at a price of \$7.50 per pair. Johnson’s normal selling price is \$11.50 per pair of sneakers. Variable manufacturing costs are \$5.00 per pair and fixed manufacturing costs are \$3.00 a pair. Johnson’s variable selling expense for its normal line of sneakers is \$1.00 per pair. What would the effect on Johnson’s operating income be if the company accepted the special order? a. Decrease by \$60,000. b. Increase by \$22,500. c. Increase by \$37,500. d. Increase by \$52,500. 204. CSO: 2C2c LOS: 2C2h The Robo Division, a decentralized division of GMT Industries, has been approached to submit a bid for a potential project for the RSP Company. Robo Division has been informed by RSP that they will not consider bids over \$8,000,000. Robo Division purchases its materials from the Cross Division of GMT Industries. There would be no additional fixed costs for either the Robo or Cross Divisions. Information regarding this project is as follows.
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