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fill in the blank questions technical chemical manufactures two products as part of 4298327

 

 

Fill in the Blank Questions
 

Technical Chemical manufactures two products as part of a joint process: MB and EB. Joint costs up to the split-off point total $70,000, and are allocated to each line of product in proportion to its relative sales value. At the split-off point, product MB can be sold for $85,000, and EB can be sold for $25,000. At an incremental cost of $30,000, MB can be processed into MB-2 and sold for $105,000. At an incremental cost of $25,000, EB can be processed into EB-2 and sold for $62,500.

 

106. Joint costs allocated to product MB total: $_____________ 
 

 

 

 

107. Joint costs allocated to product EB total: $_____________ 
 

 

 

 

108. The net change in operating income resulting from a decision to manufacture MB-2 is (specify whether the change is an increase or a decrease): $_____________ 
 

 

 

 

109. The net change in operating income resulting from a decision to manufacture EB-2 is (specify whether the change is an increase or a decrease): $_____________ 
 

 

 

 

110. The net change in operating income resulting from a decision to manufacture both MB-2 and EB-2 is (specify whether the change is an increase or a decrease): $_____________ 
 

 

 

A job of 1,000 VCRs manufactured by K Corp. contains defective parts. The cost incurred in manufacturing these defective units is $140,000. K Corp. can sell these units as scrap materials for $45 per unit or repair all 1,000 units at a total cost of $70,000. If the units are repaired, they can be sold at the normal price of $200 per unit.

 

111. What will be the total amount of the loss incurred by K Corp. on the sale of these units if they are sold for scrap at $45 per unit?
$_____________ loss 
 

 

 

112. What will be the average per-unit manufacturing cost of the VCR, including repair costs, assuming that K Corp. does the repairs? $_____________ per unit 
 

 

 

113. What will be the total amount of the loss incurred by K Corp. on the sale of these units if they are repaired and sold for $200 per unit? $_____________ loss 
 

 

 

114. What is the relevant cost to K Corp. in deciding whether or not to repair the units? (State this cost as a total amount for all 1,000 units.) $_____________ 
 

115. Should K Corp.(1) sell the units for scrap or (2) repair the units? Underline the most profitable action, and indicate the amount of the net financial benefit of this action to the company. $____________ 
 

 

Multiple Choice Questions
 

One of Phoenix Computer's products is WizardCard. The company currently produces and sells 30,000 WizardCards per month, although it has the plant capacity to produce 50,000 units per month. At the 30,000-unit-per-month level of production, the per-unit cost of manufacturing WizardCards is $45, consisting of $15 in variable costs and $30 in fixed costs. Phoenix sells WizardCards to retail stores for $90 each. Computer Marketing Corp. has offered to purchase 10,000 WizardCards per month at a reduced price. Phoenix can manufacture these additional units with no change in fixed manufacturing costs.

 

116. In deciding whether to accept this special order from Computer Marketing Corp., Phoenix should be least concerned with: 
A. What Computer Marketing Corp. intends to do with the WizardCards.
B. The $45 average cost of manufacturing WizardCards.
C. The opportunity cost of not accepting the order.
D. The incremental cost of manufacturing an additional 10,000 WizardCards per month.

 

 

117. Assume that Phoenix decides to accept the special order at a unit sales price that will add $400,000 per month to its operating income. The unit price of the special order will be: 
A. $85.
B. $70.
C. $55.
D. Some other amount.

 

 

118. When faced with a limited availability of machine-hours, management should consider producing those products which: 
A. Have the highest contribution margin per unit.
B. Have the highest contribution margin ratios.
C. Require the fewest machine-hours to produce.
D. Contribute the highest contribution margin per machine-hour.

 

 

119. Consultant Frank Alvarez recently commented that the most common error made by his clients is ignoring opportunity costs associated with business decisions. The costs Alvarez was referring to are: 
A. Benefits foregone by selecting one course of action over another.
B. The out-of-pocket costs of implementing a particular business decision.
C. Costs that make future opportunities possible.
D. Costs that have made past opportunities possible.

 

 

120. Which of the following questions would not be relevant to a make or buy decision? 
A. Will the supplier make a product that is equal in quality to our own?
B. Will the supplier meet our specified delivery dates?
C. For how long will the supplier be committed to the quoted price?
D. All of the above questions are relevant.

 

 

 

 

 

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