i need help answering these questions by Friday 11/17
1. Marsden manufactures a cat food product called Special Export. Marsden curr
22,000 bags of Special Export on hand. The variable production costs per bag ar
total fixed costs are $22,000. The cat food can be sold as it is for $9.0 per bag o
processed further into Prime Cat Food and Feline Surprise at an additional $3,80
additional processing will yield 22,000 bags of Prime Cat Food and 5,700 bags of
Surprise, which can be sold for $8.0 and $6.0 per bag, respectively. The net advantage (incremental income) of processing Special Export further int
Feline Surprise would be: $206,400
2. Altertech Inc. manufactures a product that contains a circuit board. The company has always purchased this circuit board from
a supplier for $274.0 each. Altertech recently upgraded its own
manufacturing capabilities and now has enough excess capacity
(including trained workers) to begin manufacturing the circuit
board instead of buying it. The company prepared the following
per unit cost projections of making the circuit board, assuming
that overhead is allocated to the part at the normal
predetermined overhead rate of 115% of direct labor cost.
vari $20 200
will not require
overhead cost is
$30.0 per circuit
board. What is
the effect on
decides to make
boards? A. Income will increase by $24.0 per unit.
B. Income will decrease by $24.0 per unit.
C. Income will increase by $176.0 per unit.
D. Income will decrease by $176.0 per unit.
E. Income will increase by $54.0 per unit.
3. Wave-Zone Company has 11,300 units of its sole product that it produced last ye
of $115 each. This year's model is superior to last year's and the 11,300 units ca
for their regular selling price of $172.5 each. Wave-Zone has two alternatives for
items: (1) they can be sold to a wholesaler for $11.5 each, or (2) they can be rew
total cost of $470,000 and then sold for $51.75 each. The company has enough
to rework these items without affecting any new production. Which choice would
the company's profits the most? A. Scrapping, because profit will increase by $15,175 more
B. Reworking, because profit will increase by $15,175 more
C. Reworking because profit will increase by $129,950 more than scrapping.
D. Scrapping, because profit will increase by $129,950 more
E. Reworking, because profit will increase by $114,775 more
4. Patrick Corporation inadvertently produced 10,000
defective personal radios. The radios cost $8 each to
produce. A salvage company will purchase the defective
units as they are for $3 each. Patrick's production manager
reports that the defects can be corrected for $5 per unit,
enabling them to be sold at their regular market price of
$12.50. Patrick should:
A. Sell the radios for $3 per unit.
B. Correct the defects and sell the radios at the regular price.
D. Sell the radios as they are because repairing them will
cause their total cost to exceed their selling price.
E. Sell 5,000 radios to the salvage company and repair the
Throw the radios away.
5. Alpha Co. can produce a unit of Beta for the following costs: An outside supplier offers to provide Alpha with all the Beta units it needs at $60 per unit. If Alpha buys from the supplier, Alpha will still incur 40% of its overhead. Alpha should:
A. Buy Beta since the relevant cost to make it is $72.
B. Make Beta since the relevant cost to make it is $56.
C. Buy Beta since the relevant cost to make it is $48.
D. Make Beta since the relevant cost to make it is $48. E. Buy Beta since the relevant cost to make it is $56.
6. A company has the choice of either selling 1,000 defective
units as scrap or rebuilding them. The company could sell
the defective units as they are for $4.00 per unit.
Alternatively, it could rebuild them with incremental costs of
$1.00 per unit for materials, $2.00 per unit for labor, and
$1.50 per unit for overhead, and then sell the rebuilt units
for $8.00 each. What should the company do?
A. Sell the units as scrap.
B. Rebuild the units.
C. It does not matter because both alternatives have the
D. Neither sell nor rebuild because both alternatives produce
a loss. Instead, the company should store the units
E. Throw the units away.
7. A company has already incurred a $12,000 cost in
partially producing its two products. Their selling prices when
partially and fully processed are shown in the following table
with the additional costs necessary to finish their processing.
Based on this information, should any products be processed
further? A. Both product A and product B should be processed further.
B. Neither product A nor product B should be processed
C. Only product B should be processed further.
D. Only product A should be processed further. E. A processing further decision cannot be made from the
Rocko Inc. has a machine with a book value of $50,000 and a
five-year remaining life. A new machine is available at a cost
of $85,000 and Rocko can also receive $38,000 for trading in
the old machine. The new machine will reduce variable
manufacturing costs by $14,000 per year over its five-year
life. Should the machine be replaced?
A. Yes, because income will increase by $14,000 per year.
B. Yes, because income will increase by $23,000 in total.
C. No, because the company will be $23,000 worse off in
D. No, because the income will decrease by $14,000 per
E. Rocko will be not be better or worse off by replacing the
An opportunity cost:
A. Is an unavoidable cost.
B. Requires a current outlay of cash.
C. Results from past managerial decisions.
D. Is the lost benefit of choosing an alternative course of
E. Is irrelevant in decision making.
Bridgestreet, Inc. has three operating departments: Cutting,
Assembling, and Finishing. Cutting has 4,000 employees and
occupies 33,000 square feet. Assembling has 3,200 employees
and occupies 24,000 square feet. Finishing has 800 employees
and occupies 53,000 square feet. Indirect factory costs for the
current period were Administrative $470,000 and Maintenance
$587,500. Administrative costs are allocated to operating
departments based on the number of workers and maintenance
costs are allocated to operating departments based on square
footage occupied. Based on the preceding data, determine the administrative cost allocated to eac
department of Bridgestreet, Inc. A.
Option E Cuttin
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