Reference no: EM132279413

Questions -

Q1. Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $4,500 from sales $200,000, variable costs $175,000, and fixed costs $29,900. If the Big Bart line is eliminated, $19, 400 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated.

Q2. Bryant Company Has a factory machine with a book value of $93,100 and a remaining useful life of 7 years. It can be sold for $34,200. A new machine is available at a cost of $ 378,500. This machine will have a 7-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $605,900 to $457,900. Prepare an analysis showing whether the old machine should be retained or replaced.

Q3. At Bargain Electronics, it costs $32 per unit ($19 variable and $13 fixed) to make an MP3 player at full capacity that normally sells for $46. A foreign wholesaler offers to buy 3, 180 units at $26 each. Bargain Electronics will incur special shipping costs of $4 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order.

Q4. Bogart Company is considering two alternatives. Alternative A Will have revenues of $145,500 and costs of $100,000. Alternative B will have revenues of $187,900 and costs of $121,700. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income.