Post University Ch 10 & 11 Managerial Accounting and Finance Questions

Business Finance

Lusk Corporation produces and sells 15,500 units of Product X each month. The selling price of Product X is $25 per unit, and variable expenses are $19 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $74,000 of the $105,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the annual financial advantage (disadvantage) for the company of eliminating this product should be:

Multiple Choice

Top of Form

($62,000)

$12,000

$43,000

($43,000)

Bottom of Form

Next Visit question map

Question 1 of 9 Total 1 of 9

Prev

A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be:

Multiple Choice

Top of Form

($10,000)

$10,000

($50,000)

$50,000

Bottom of Form

Multiple Choice

LN, JQ, RQ

RQ, LN, JQ

RQ, JQ, LN

JQ, RQ, LN

The Wyeth Corporation produces three products, A, B, and C, from a single raw material input. Product A can be sold at the splitoff point for $40,000, or it can be processed further at a total cost of $15,000 and then sold for $58,000. Joint costs total $60,000 annually. Product A should be:

Multiple Choice

Top of Form

discontinued because revenues after further processing are less than total joint costs.

sold at the split-off point.

processed further and then sold.

processed further only if its share of the total joint costs is less than the incremental revenues from further processing.

Bottom of Form

Next Visit question map

Question 4 of 9 Total 4 of 9

Prev

What is the financial advantage (disadvantage) of Alternative Y over Alternative X?

Multiple Choice

$135,100

$121,700

$148,500

$26,800

The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $26,800. If these calculators are upgraded at a total cost of $10,000, they can be sold for a total of $30,000. As an alternative, the calculators can be sold in their present condition for $11,200.

The sunk cost in this situation is:

Multiple Choice

Top of Form

$10,000

$26,800

$11,200

$0

Bottom of Form

Next Visit question map

Question 6 of 9 Total 6 of 9

Prev

In the company’s accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $30,000 of the fixed manufacturing expenses and $13,000 of the fixed selling and administrative expenses are avoidable if product V86O is discontinued.

What would be the financial advantage (disadvantage) from dropping product V86O?

Multiple Choice

($35,000)

($5,000)

$35,000

$5,000

Multiple Choice

($34,500)

($30,500)

($15,500)

($38,500)

Multiple Choice

JT, SM, VD

JT, VD, SM

VD, SM, JT

SM, VD, JT

Multiple Choice

7.2 hours

12.0 hours

39.6 hours

40.5 hours

Multiple Choice

39.6%

31.6%

60.4%

56.3%

Multiple Choice

21.28

3.90

0.18

5.45

Multiple Choice

3.50%

15.00%

11.15%

.50%

Cabell Products is a division of a major corporation. Last year the division had total sales of $11,440,000, net operating income of $686,400, and average operating assets of $2,402,400. The company’s minimum required rate of return is 13%.

The division’s residual income is closest to:

Multiple Choice

$686,400

$374,088

$(624,624)

$998,712

The Consumer Products Division of Goich Corporation had average operating assets of $470,000 and net operating income of $40,000 in May. The minimum required rate of return for performance evaluation purposes is 9%.

What was the Consumer Products Division’s minimum required return in May?

Multiple Choice

$3,600

$40,000

$45,900

$42,300

Multiple Choice

31.6 hours

3.8 hours

27.8 hours

13.1 hours

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *