# 1500 question 8 veritime assurance company provides

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\$1,500
Question 8 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 decrease in company profits if the automobile insurance product line is dropped . 10%)
Question 11 XYZ Company produces two products, A and B. For the coming period, 140,000 machine hours and 200,000 direct labor hours are available. Information on the two products appears below: Product A Product B selling price per unit ........... \$6.00 \$8.00 variable costs per unit .......... \$4.00 \$5.00 machine hours per unit ........... 2.00 5.00 direct labor hours per unit ...... 6.00 4.00 Calculate the number of units of Product B that should be produced in order to maximize net income . 3B 0 20,000
Using a graph, you can determine the possible corner points to be: \$66,666 \$84,000 \$100,000 = \$0