ACCT 212 Read & Interact Wild & Shaw Chapter 10 Relevant Costing solutions complete answers

ACCT 212 Read & Interact Wild & Shaw Chapter 10 Relevant Costing solutions complete answers 

 

A price-setter company will use more:

 

A company purchased manufacturing equipment 5 years ago for $50,000. Book value is currently $5,000 and the remaining useful life is 3 years. The equipment incurs variable manufacturing costs of $30,000. The company is considering replacing the equipment. The new equipment will cost $75,000, have a useful life of 3 years, and is more efficient and, therefore, only costs $10,000 in variable manufacturing costs to operate each year. The vendor is willing to accept the old equipment with a selling price of $20,000. The company should:

 

True or false: When considering the elimination of a segment, management should eliminate a segment if income increases from elimination.

 

A company receives a special order of 10,000 units of product. The potential customer is willing to pay $0.75 per unit. Current sales are $90,000 and current costs are $75,000 for 90,000 units. If the order is accepted, costs will increase to $82,000. If the company has the capacity to accept the order without affecting current sales, the company should:

 

Which of the following are factors indicating that a company is a price-taker?

 

When making keep or replace decisions, management should consider the: (Check all that apply.)

 

The decision rule for segment elimination is to eliminate a segment if income _____ from elimination. 

 

A company produces two products. Product A sells for $25, has variable costs of $15, and requires 2 machine hours to produce. Product B sells for $35, has variable costs of $20, and requires 5 machine hours to produce. 40,000 machine hours are available. The company can sell all it can make of either product. Which statement is true?

 

A company incurred $1,000 in costs to produce 500 units which normally sell for $1,500. Upon inspection, it was determined the units were defective and reworking the units would cost an additional $1.50 per unit. The defective units can be sold as is for $1.00 each. How should the company handle the defective units?

 

Incremental or differential costs are   costs in making decisions.

 

When resources are constrained and products use different inputs, the company should produce the product with the:

 

When making scrap or rework decisions, management should consider: (Check all that apply.)

 

A manufacturing company currently produces 1,000 units of a product at a cost of $5,000. The units sell for $7,000. Alternatively, the company can process the units further to produce a refined product that will sell for $10,000. The additional processing will cost $4,000. The company should:

 

 costs, also called differential costs, are the additional costs from selecting a certain course of action.

 

List the time and materials price steps in the correct order:

 

When evaluating special offer decisions, management should consider: (Check all that apply.)

 

A common way to price services is

 

A company receives an order of 10,000 units of product. The potential customer is willing to pay $0.75 per unit. Current sales are $90,000 and current costs are $75,000 for 90,000 units. If the order is accepted, costs will increase to $82,000. If the company has the capacity to accept the order without affecting current sales, the company should:

 

A student is considering adding a minor to her degree. The additional courses would require the student to attend college for an additional semester, but would allow greater job opportunities upon graduation. The relevant benefits related to this decision are:

 

The last step in the decision making process is:

 

Incremental        refer to the additional revenue generated by selecting a particular course of action over another.

 

Incremental costs are        in making decisions.

 

A company currently makes a component used in production. The per unit costs incurred to make the component include: Direct materials: $5; Direct labor: $2; Overhead: $4; Total cost: $11. Twenty-five percent of the overhead costs are considered incremental. The company can purchase the component from another source for $10. The company should do which of the following?

 

List the steps of the decision making process, with the first step on top.

 

True or false: When considering the elimination of a segment, management should look at more than the segment's performance report.

 

In a make or buy decision, management should consider: (Check all that apply.)

 

A manufacturing company currently produces 1,000 units of a product at a cost of $5,000. The units sell for $7,000. Alternatively, the company can process further to produce a refined product that will sell for $10,000. The additional processing will cost $4,000. The company should:

 

    costs, also called differential costs, are the additional costs incurred if a company pursues a certain course of action.

 

A company purchased manufacturing equipment 5 years ago for $50,000. Accumulated depreciation is currently $45,000 and the remaining useful life is 3 years. The equipment incurs annual operating costs of $30,000. The company is considering replacing the equipment. The new equipment will cost $75,000, have a useful life of 3 years, and is more efficient and, therefore, only costs $10,000 to operate each year. The vendor is willing to accept the old equipment with a trade-in allowance of $10,000. The company should:

 

When making sell or process decisions, management should consider: (Check all that apply.)

 

The decision rule for segment elimination is to consider eliminating a segment if the segment revenues are less than the segment ______ expenses.

 

When making keep or replace equipment decisions, management should consider the: (Check all that apply.)