Reference no: EM132837305

Question -

Q1. Southern Candle Company observes the following data for May 2015 production:

Volume Total Cost

88 units $1,300

80 units $1,200

96 units $1,400

Compute the variable cost per unit using the high-low method:

a. $15.00

b. $14.78

c. $13.75

d. $12.50

Q2. Stockman Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes: The budgeted denominator level is 2,000 units. Units produced total 1,500 units. Units sold total 1,200 units. Beginning inventory was zero. The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level. Manufacturing variances are closed to cost of goods sold. What is difference between absorption and variable costing income for the company?

a. $9,600

b. $4,800

c. $3,600

d. $14,400

Q3. Cardinal Co. produces a single product. Its normal selling price is $30.00 per unit. The variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Cardinal received a request for a special order that would not jeopardize normal sales. The order was for 1,500 units and a special price of $20.00 per unit. Cardinal Co. has the capacity to handle the special order and, for this order, a variable selling cost of $1.00 per unit would be eliminated. If the order is accepted, what would be the impact on net income?

a. decrease of $750

b. decrease of $4,500

c. increase of $3,000

d. increase of $1,500

Q4. Which of the following should be a relevant cost consideration in assessing the feasibility of an equipment replacement analysis?

a. Existing equipment depreciation

b. Book value of the existing equipment

c. Gain on sale of the existing equipment

d. Training cost of staff for new equipment