Reference no: EM132940840

Questions -

Q1. Bertrille Inc. incurs the following costs to produce 20,000 units of a subcomponent:

Direct materials $18,200

Direct labor 13,750

Variable overhead 24,000

Fixed overhead 16,300

An outside supplier has offered to sell Bertrille the subcomponent for $3.25 a unit. If Bertrille accepts the offer, by how much will net income increase or decrease?

Q2. A company has three product lines, one of which reflects the following results:

Sales $235,000

Variable expenses 160,000

Contribution margin 75,000

Fixed expenses 140,000

Net loss ($65,000)

If this product line is eliminated, 30% of the fixed expenses can be eliminated and the other 70% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will:

Q4. Hattrick, Inc. makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:

Variable Cost Per Unit Sold Monthly Fixed Cost

Sales commissions $0.80 $6,000

Shipping 1.25

Advertising 0.40

Executive salaries 40,000

Depreciation on office equipment 8,000

Other 0.552 8,000

Expenses are paid in the month incurred. If the company has budgeted to sell 7,000 umbrellas in October, how much is the fixed budgeted selling and administrative expenses for October?