Reference no: EM132559110

Question 1: Aircraft Products, a manufacturer of aircraft landing gear, makes 3,000 units each year of a special valve used in assembling one of its products. The unit cost of producing this valve includes variable costs of $60 and fixed costs of $55. The valves could be purchased from an outside supplier at $67 each. If the valve were purchased from the outside supplier, 40% of the total fixed costs incurred in producing this valve could be eliminated. Buying the valves from the outside supplier instead of making them would cause the company's operating income to:

A. Increase by $45,000.

B. Decrease by $45,000.

C. Increase by $78,000.

D. Decrease by $78,000.

Question 2: Accents Associates sells only one product, with a current selling price of $160 per unit. Variable costs are 20% of this selling price, and fixed costs are $40,000 per month. Management has decided to reduce the selling price to $155 per unit in an effort to increase sales. Assume that the cost of the product and fixed operating expenses are not changed by this reduction in selling price.

At the current selling price of $160 per unit, the contribution margin ratio is:

Multiple Choice

A. 160%

B. 32%

C. 80%

D. 20%

Question 3: At the current selling price of $160 per unit, the dollar volume of sales per month necessary for Accents to break-even is:

Multiple Choice

A. $250,000.

B. $40,000.

C. Some other amount.

D. $50,000.

Question 4: Seidman Company manufactures and sells 37,000 units of product X per month. Each unit of product X sells for $15 and has a contribution margin of $6. If product X is discontinued, $90,000 in fixed monthly overhead costs would be eliminated and there would be no effect on the sales volume of Seidman Company's other products. If product X is discontinued, Seidman Company's monthly income before taxes should:

A. Increase by $132,000.

B. Increase by $222,000.

C. Decrease by $132,000.

D. Decrease by $222,000.

Question 5: Seidman Company manufactures and sells 37,000 units of product X per month. Each unit of product X sells for $15 and has a contribution margin of $6. If product X is discontinued, $90,000 in fixed monthly overhead costs would be eliminated and there would be no effect on the sales volume of

A. Increase by $132,000.

B. Increase by $222,000.

C. Decrease by $132,000.

D. Decrease by $222,000.

Question 6: If the unit sales price is $28, variable costs are $7 per unit and fixed costs are $22,000, how many units must be sold to earn an income of $280,000? (Round your final answer to the next whole number.)

A. 13,333 units

B. 1,048 units

C. 14,381 units

D. 12,286 units

Question 7: Alton Company produces metal belts. During the current month, the company incurred the following product costs:

Raw materials $81,000;

Direct labor $50,500;

Electricity used in the Factory $20,500;

Factory foreperson salary $2,650; and

Maintenance of factory machinery $1,850.

Alton Company's indirect product costs totaled:

A. $23,150.

B. $25,000.

C. $50,500

D. $131,500.