UNLV Incremental Costs Accounting Worksheet

Description

1 attachmentsSlide 1 of 1attachment_1attachment_1

Unformatted Attachment Preview

IncorrectQuestion 1
0 / 4 pts
Accepting a special order will improve overall net operating income if the revenue
from the special order exceeds:
the incremental costs associated with the order.
the sunk costs associated with the order.
the variable costs associated with the order.
the contribution margin on the order.
IncorrectQuestion 2
0 / 4 pts
Which of the following costs are always irrelevant in decision making?
Fixed Cost
Opportunity Costs
Avoidable Costs
Sunk Costs
IncorrectQuestion 3
0 / 4 pts
The Jabba Corporation manufactures the “Snack Buster” which consists of a
wooden snack chip bowl with an attached porcelain dip bowl. Which of the following
would be relevant in Jabba’s decision to make the dip bowls or buy them from an
outside supplier?
Fixed overhead cost that
The variable selling
A)
B)
C)
D)
can be eliminated if the
bowls are purchased
from the outside supplier
Yes
Yes
No
No
cost of the Snack
Buster
Yes
No
Yes
No
Choice C
Choice A
Choice B
Choice D
IncorrectQuestion 6
0 / 4 pts
Lusk Corporation produces and sells 14,100 units of Product X each month. The
selling price of Product X is $23 per unit, and variable expenses are $17 per unit. A
study has been made concerning whether Product X should be discontinued. The
study shows that $74,000 of the $104,000 in monthly fixed expenses charged to
Product X would not be avoidable even if the product was discontinued. If Product X
is discontinued, the annual financial advantage (disadvantage) for the company of
eliminating this product should be:
$19,400
$49,400
($49,400)
($54,600)
IncorrectQuestion 7
0 / 4 pts
Part U16 is used by Mcvean Corporation to make one of its products. A total of
22,000 units of this part are produced and used every year. The company’s
Accounting Department reports the following costs of producing the part at this level
of activity:
Direct materials
Direct labor
Variable manufacturing overhead
Supervisor’s salary
Depreciation of special equipment
Allocated general overhead
Per Unit
$ 4.70
$ 9.30
$ 9.80
$ 5.20
$ 3.60
$ 8.80
An outside supplier has offered to make the part and sell it to the company for
$31.90 each. If this offer is accepted, the supervisor’s salary and all of the variable
costs, including the direct labor, can be avoided. The special equipment used to
make the part was purchased many years ago and has no salvage value or other
use. The allocated general overhead represents fixed costs of the entire company,
none of which would be avoided if the part were purchased instead of produced
internally. In addition, the space used to make part U16 could be used to make more
of one of the company’s other products, generating an additional segment margin of
$34,000 per year for that product. The annual financial advantage (disadvantage) for
the company as a result of buying part U16 from the outside supplier should be:
($29,800)
$34,000
($133,200)
($213,400)
IncorrectQuestion 8
0 / 4 pts
WP Corporation produces products X, Y, and Z from a single raw material input in a
joint production process. Budgeted data for the next month is as follows:
Units produced
Per unit sales value at split-off
Added processing costs per unit
Per unit sales value if processed further
Product XProduct YProduct Z
2,200
2,700
3,700
$ 20.00 $ 26.00 $ 22.00
$ 5.00 $ 7.00 $ 7.00
$ 28.00 $ 28.00 $ 33.00
The cost of the joint raw material input is $75,000. Which of the products should be
processed beyond the split-off point?
Product
A) yes
B) yes
C)no
D)no
XProduct
yes
no
yes
yes
YProduct Z
no
yes
no
yes
Choice C
Choice D
Choice B
Choice A
IncorrectQuestion 9
0 / 4 pts
Gallerani Corporation has received a request for a special order of 4,100 units of
product A90 for $26.70 each. Product A90’s unit product cost is $26.00, determined
as follows:
Direct materials
$2.45
Direct labor
7.75
Variable manufacturing overhead 6.85
Fixed manufacturing overhead
8.95
Unit product cost
$26.00
Assume that direct labor is a variable cost. The special order would have no effect
on the company’s total fixed manufacturing overhead costs. The customer would like
modifications made to product A90 that would increase the variable costs by $3.10
per unit and that would require an investment of $20,000 in special molds that would
have no salvage value. This special order would have no effect on the company’s
other sales. The company has ample spare capacity for producing the special order.
The annual financial advantage (disadvantage) for the company as a result of
accepting this special order should be:
$6,855
$2,870
$(47,970)
$(29,840)
IncorrectQuestion 11
0 / 4 pts
An automated turning machine is the current constraint at Jordison Corporation. Three
products use this constrained resource. Data concerning those products appear below:
LN
JQ
RQ
Selling price per unit
$ 161.88
$ 350.41
$ 446.71
Variable cost per unit
$ 116.12
$ 279.11
$ 338.71
2.60
4.60
7.50
Minutes on the constraint
Rank the products in order of their current profitability from most profitable to least
profitable. In other words, rank the products in the order in which they should be
emphasized. (Round your intermediate calculations to 2 decimal places.)
RQ, JQ, LN
JQ, RQ, LN
RQ, LN, JQ
LN, JQ, RQ
IncorrectQuestion 12
0 / 4 pts
Bruce Corporation makes four products in a single facility. These products have the
following unit product costs:
Direct materials
Direct labor
Variable manufacturing
overhead
Fixed manufacturing overhead
Unit product cost
Products
A
$ 15.70
17.70
B
$ 19.60
21.10
C
$ 12.60
15.50
D
$ 15.30
9.50
4.50
5.70
8.20
5.20
27.60
65.50
14.50
60.90
14.60
50.90
16.60
46.60
Additional data concerning these products are listed below.
Grinding minutes per unit
Selling price per unit
Variable selling cost per unit
Products
A
2.05
$ 79.20
$ 2.70
B
C
D
1.15
$ 71.60
$ 3.20
0.75
$ 68.40
$ 2.90
0.35
$ 63.10
$ 3.60
Monthly demand in units
3,100
2,100
2,100
4,100
The grinding machines are potentially the constraint in the production facility. A total of
10,500 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Which product makes the MOST profitable use of the grinding machines? (Round your
intermediate calculations to 2 decimal places.)
Product D
Product A
Product B
Product C
IncorrectQuestion 13
0 / 4 pts
The constraint at Rauchwerger Corporation is time on a particular machine. The company
makes three products that use this machine. Data concerning those products appear below:
Selling price per unit
Variable cost per unit
Minutes on the constraint
WX
$ 335.18
$ 259.26
7.50
KD
$ 228.46
$ 173.08
4.30
FS
$ 199.21
$ 159.61
5.50
Assume that sufficient time is available on the constrained machine to satisfy demand for all
but the least profitable product. Up to how much should the company be willing to pay to
acquire more of the constrained resource? (Round your intermediate calculations to 2
decimal places.)
$7.20 per minute
$12.88 per minute
$75.92 per minute
$39.60 per minute
IncorrectQuestion 15
0 / 4 pts
Moates Corporation has provided the following data concerning an investment
project that it is considering:
Initial investment
$ 220,000
Annual cash flow
$ 129,000 per year
Expected life of the project
4
years
Discount rate
9
%
Click here to view Exhibit 13B-1 (Links to an external site.) and Exhibit 13B-2 (Links
to an external site.), to determine the appropriate discount factor(s) using the tables
provided.
The net present value of the project is closest to: (Round your intermediate
calculations and final answer to the nearest whole dollar amount.)
$220,000
$197,831
$(91,000)
$(197,831)
IncorrectQuestion 16
0 / 4 pts
The management of Penfold Corporation is considering the purchase of a machine
that would cost $350,000, would last for 5 years, and would have no salvage value.
The machine would reduce labor and other costs by $82,000 per year. The company
requires a minimum pretax return of 12% on all investment projects.
Click here to view Exhibit 13B-1 (Links to an external site.) and Exhibit 13B-2 (Links
to an external site.) to determine the appropriate discount factor(s) using the tables
provided.
The net present value of the proposed project is closest to (Ignore income
taxes.): (Round your intermediate calculations and final answer to the nearest
whole dollar amount.)
$(34,390)
$(54,390)
$(43,050)
$(65,730)
UnansweredQuestion 17
0 / 4 pts
If the net present value of a project is zero based on a discount rate of 16%, then the
internal rate of return is:
greater than 16%.
equal to 16%.
less than 16%.
cannot be determined from this data.
IncorrectQuestion 18
0 / 4 pts
The management of Byrge Corporation is investigating buying a small used aircraft
to use in making airborne inspections of its above-ground pipelines. The aircraft
would have a useful life of 4 years. The company uses a discount rate of 20% in its
capital budgeting. The net present value of the investment, excluding the intangible
benefits, is −$316,440. (Ignore income taxes.)
Click here to view Exhibit 13B-1 (Links to an external site.) and Exhibit 13B-2 (Links
to an external site.), to determine the appropriate discount factor(s) using the tables
provided.
How large would the annual intangible benefit have to be to make the investment in
the aircraft financially attractive? (Round your intermediate calculations and final
answer to the nearest whole dollar amount.)
$316,440
$122,225
$79,110
$63,288
IncorrectQuestion 19
0 / 4 pts
A company is pondering an investment project that has an internal rate of return
which is equal to the company’s discount rate. The project profitability index of this
investment project is:
1.5
1.0
0.5
0.0
IncorrectQuestion 20
0 / 4 pts
The management of Ro Corporation is investigating automating a process. Old
equipment, with a current salvage value of $15,000, would be replaced by a new
machine. The new machine would be purchased for $408,000 and would have a 6
year useful life and no salvage value. By automating the process, the company
would save $141,000 per year in cash operating costs. The simple rate of return on
the investment is closest to (Ignore income taxes.): (Round your answer to 1
decimal place.)
17.9%
34.6%
16.7%
18.6%
IncorrectQuestion 21
0 / 4 pts
Bau Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost
$363,510, would have a useful life of 7 years, and would have no salvage value. The
tractor-trailer would be used in the company’s hauling business, resulting in
additional net cash inflows of $90,000 per year. The internal rate of return on the
investment in the tractor-trailer is closest to (Ignore income taxes.):
Click here to view Exhibit 13B-1 (Links to an external site.) and Exhibit 13B-2 (Links
to an external site.), to determine the appropriate discount factor(s) using the tables
provided.
18%
16%
15%
13%
IncorrectQuestion 23
0 / 4 pts
Crowl Corporation is investigating automating a process by purchasing a machine for
$801,000 that would have a 9 year useful life and no salvage value. By automating
the process, the company would save $137,000 per year in cash operating costs.
The new machine would replace some old equipment that would be sold for scrap
now, yielding $22,000. The annual depreciation on the new machine would be
$89,000. The simple rate of return on the investment is closest to (Ignore income
taxes.): (Round your answer to 1 decimal place.)
11.20%
6.16%
5.20%
16.80%
IncorrectQuestion 25
0 / 4 pts
Joetz Corporation has gathered the following data on a proposed investment project
(Ignore income taxes.):
Investment required in equipment
Annual cash inflows
Salvage value of equipment
Life of the investment
Required rate of return
$ 34,000
$ 7,600
$ 0
15
years
10
%
The company uses straight-line depreciation on all equipment. Assume cash flows
occur uniformly throughout a year except for the initial investment.
Click here to view Exhibit 13B-1 (Links to an external site.) and Exhibit 13B-2 (Links
to an external site.), to determine the appropriate discount factor(s) using the tables
provided.
The internal rate of return of the investment is closest to:
25%
23%
19%
21%

Purchase answer to see full
attachment

Explanation & Answer:
Worksheet

Tags:
costs

accounting

Incremental

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.