Question 1

Gordon Corporation produced 10,000 digital watches in the current year. Variable costs are $8 per watch. Overhead assigned is $2.25 per watch. A supplier offers the watches for $9.50 each. Gordon's production manager reports the incremental overhead is $1.25 per watch. Gordon should:

Accepted Answer

A)   Continue making the watches as an additional $1.50 per watch would be incurred if bought from the supplier.
B)   Continue making the watches as an additional $0.25 per watch would be incurred if bought from the supplier.
C)   Buy the watches as they would save $0.75 per watch.
D)   Buy the watches as they would save $1.50 per watch.
E)   Buy the watches as they would save $1.75 per watch.F) B) and C)
G) B) and E)

Question 2

Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost data:
 Which product(s)  should not be processed further?

Accepted Answer

A)   Premier.
B)   Deluxe.
C)   Super.
D)   Basic.
E)   Premier and Basic.F) B) and D)
G) B) and C)

Question 3

A company produces three different products that all require processing on the same machines. The company has only 27,000 machine hours available in each year. Production information for each product is:
  Required:
(1) Determine the preferred sales mix if there are no market constraints on any of the products.
(2) Determine the preferred sales mix if the demand is limited to 5,000 units for each product.
(3) Determine the preferred sales mix if the demand is limited to 3,000 units for each product.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> In general, the company should produce ...

Question 4

Factor Co. can produce a unit of product for the following costs:  An outside supplier offers to provide Factor with all the units it needs at $46 per unit. If Factor buys from the supplier, the company will still incur 60% of its overhead. Factor should choose to:

Accepted Answer

A)   Buy since the relevant cost to make it is $56.
B)   Make since the relevant cost to make it is $48.
C)   Buy since the relevant cost to make it is $48.
D)   Make since the relevant cost to make it is $32.
E)   Buy since the relevant cost to make it is $32.F) None of the above
G) A) and E)

Question 5

Markson Company had the following results of operations for the past year:  A foreign company offers to buy 2,000 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $1,600 for the purchase of special tools. Markson's annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:

Accepted Answer

A)   Increase by $3,500.
B)   Decrease by $5,650.
C)   Decrease by $1,600.
D)   Increase by $1,900.
E)   Decrease by $5,100.F) A) and B)
G) B) and E)

Exam 10: Relevant Costing for Managerial Decisions

Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost data: Which product(s) should not be processed further?

Correct Answer
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Correct Answer
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Gordon Corporation produced 10,000 digital watches in the current year. Variable costs are $8 per watch. Overhead assigned is $2.25 per watch. A supplier offers the watches for $9.50 each. Gordon's production manager reports the incremental overhead is $1.25 per watch. Gordon should:

Correct Answer
verified

Correct Answer
verified
In general, the company should produce ...
View Answer

Factor Co. can produce a unit of product for the following costs: An outside supplier offers to provide Factor with all the units it needs at $46 per unit. If Factor buys from the supplier, the company will still incur 60% of its overhead. Factor should choose to:

Correct Answer
verified

Exam 10: Relevant Costing for Managerial Decisions

Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost data: Which product(s) should not be processed further?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Gordon Corporation produced 10,000 digital watches in the current year. Variable costs are $8 per watch. Overhead assigned is $2.25 per watch. A supplier offers the watches for $9.50 each. Gordon's production manager reports the incremental overhead is $1.25 per watch. Gordon should:

Correct AnswerverifiedShow Answer

Correct Answerverified In general, the company should produce ...View AnswerShow Answer

Factor Co. can produce a unit of product for the following costs: An outside supplier offers to provide Factor with all the units it needs at $46 per unit. If Factor buys from the supplier, the company will still incur 60% of its overhead. Factor should choose to:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In general, the company should produce ...
View Answer

Correct Answer
verified