FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Incremental Analysis

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

If a company must expand capacity to accept a special order, it is likely that there will be

A) an increase in unit variable costs.
B) no increase in fixed costs.
C) an increase in variable and fixed costs per unit.
D) an increase in fixed costs.

Correct Answer

verified

Show Answer

Question 72

Multiple Choice

Review LaterAdd Note

Review Later

The cost to produce Part A was $20 per unit in 2019. During 2020, it has increased to $23 per unit. In 2020, Supplier Company has offered to supply Part A for $18 per unit. For the make-or-buy decision,

A) incremental revenues are $5 per unit.
B) incremental costs are $3 per unit.
C) net relevant costs are $3 per unit.
D) differential costs are $5 per unit.

Correct Answer

verified

Show Answer

Question 73

Multiple Choice

Review LaterAdd Note

Use the following information for questions Hi-Tech Inc. has several outdated computers that cost a total of $17,800 and could be sold as scrap for $4,600. They could be updated for an additional $2,400 and sold. If Hi-Tech updates the computers and sells them, net income will increase by $9,000. -At what price were the updated versions sold?

The elimination of an unprofitable product line may adversely affect the remaining product lines.

Use the following information for questions A company's unit costs based on 100,000 units are: $\begin{array}{l}\text { Variable costs }&\$75 \\\text { Fixed costs }&30\end{array}$ The normal unit sales price per unit is $165. A special order from a foreign company has been received for 5,000 units at $135 a unit. In order to fulfill the order, 3,000 units of regular sales would have to be foregone. -The opportunity cost associated with this order is

A company is contemplating the acceptance of a special order. The order would not affect regular sales and could be filled without exceeding plant capacity. However, a new stamping machine would have to be purchased in order to stamp the customer's name on the product. Which of the following is likely?

A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to

It is better not to replace old equipment if it is not fully depreciated.

The basic decision rule in a sell or process further decision is: sell without further processing as long as the incremental revenue from processing exceeds the incremental processing costs.

Use the following information for questions Paul Bunyon Lumber Co. produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period: $\begin{array}{lrrr}& \text { Sales Value } & \text { Additional } & \text { Sales Value after } \\\text { Product } & \text { at Split-off } & \text { Variable Costs } & \text { FurtherProcessing }\\\text { Green lumber } & \$ 159,600 & \$ 24,000 & \$ 178,000 \\\text { Rough lumber } & 124,000 & 28,200 & 173,600 \\\text { Sawdust } & 102,000 & 19,600 & 130,000\end{array}$ -Which products should be processed further?

Nonfinancial information that management might evaluate in making a decision would not include

Costs that will differ between alternatives and influence the outcome of a decision are

In a decision concerning replacing old equipment with new equipment, the book value of the old equipment can be considered an opportunity cost.

Pratt Company has old inventory on hand that cost $15,000. Its scrap value is $20,000. The inventory could be sold for $50,000 if manufactured further at an additional cost of $15,000. What should Pratt do?

An opportunity cost

Tasty Bites produces corn chips. The cost of one batch is below: $\begin{array} { l r } \text { Direct materials } & \$ 18 \\\text { Direct labor } & 13 \\\text { Variable overhead } & 11 \\\text { Fixed overhead } & 14\end{array}$ An outside supplier has offered to produce the corn chips for $30 per batch. How much will Tasty Bites save if it accepts the offer?

Accounting's contribution to the decision-making process occurs in all of the following steps except to

The process of evaluating financial data that change under alternative courses of action is called

Book value of old equipment is considered to be a

Use the following information for questions Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected: $\begin{array}{lrr}&\text { Old Equipment}&\text { New Equipment }\\\text { Purchase price } & \$ 225,000 & \$ 375,000 \\\text { Accumulated depreciation } & 90,000 & -0- \\\text { Annual operating costs } & 300,000 & 240,000\end{array}$ If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. -The net advantage (disadvantage) of replacing the old equipment with the new equipment is