ACCT 505 Week 6 Quiz Segment Reporting and Relevant Costs for Decisions

ACCT 505 Week 6 Quiz Segment Reporting and Relevant Costs for Decisions
Click Here to Buy the Tutorial
http://www.uoptutorial.com/index.php?route=product/product&path=587&product
_id=9011
For more course tutorials visit
www.uoptutorial.com
Question :
(TCO D) Return on investment (ROI) is equal to the margin multiplied by
2.
Question :
(TCO D) For which of the following decisions are opportunity costs relevant?
The decision to make or buy a needed part
The desision to keep or drop a product line
(A)
Yes
Yes
(B)
Yes
No
(C)

No
Yes
(D)
No
No
3.
Question :
(TCO D) Last year, the House of Orange had sales of $826,650, net operating
income of $81,000, and operating assets of $84,000 at the beginning of the year
and $90,000 at the end of the year. What was the company's turnover, rounded to
the nearest tenth?
1.
Question :
(TCO D) Data for December concerning Dinnocenzo Corporation's two major
business segments-Fibers and Feedstocks-appear below:
Sales revenues, Fibers
$870,000
Sales revenues, Feedstocks
$820,000
Variable expenses, Fibers
$426,000
Variable expenses, Feedstocks
$344,000

Traceable fixed expenses, Fibers
$148,000
Traceable fixed expenses, Feedstocks
S156,000
Common fixed expenses totaled $314,000 and were allocated as follows: $129,000
to the Fibers business segment and $185,000 to the Feedstocks business segment.
Required:
Prepare a segmented income statement in the contribution format for the company.
Omit percentages; show only dollar amounts.
2.
Question :
(TCO D) Wryski Corporation had net operating income of $150,000 and average
operating assets of $500,000. The company requires a return on investment of 19%.
Required:
i. Calculate the company's current return on investment and residual income.
ii. The company is investigating an investment of $400,000 in a project that will
generate annual net operating income of $78,000. What is the ROI of the project?
What is the residual income of the project? Should the company invest in this
project?
3.
Question :
(TCO D) Tjelmeland Corporation is considering dropping product S85U. Data
from the company's accounting system appear below.
Sales

$360,000
Variable Expenses
$158,000
Fixed Manufacturing Expenses
$119,000
Fixed Selling and Administrative Expenses
$94,000
All fixed expenses of the company are fully allocated to products in the company's
accounting system. Further investigation has revealed that $55,000 of the fixed
manufacturing expenses and $71,000 of the fixed selling and administrative
expenses are avoidable if product S85U is discontinued.
Required:
i. According to the company's accounting system, what is the net operating income
earned by product S85U? Show your work!
ii. What would be the effect on the company's overall net operating income of
dropping product S85U? Should the product be dropped? Show your work!
4.
Question :
(TCO D) Fouch Company makes 30,000 units per year of a part it uses in the
products it manufactures. The unit product cost of this part is computed as follows.
Direct Materials
$15.70
Direct Labor
$17.50

Variable Manufacturing Overhead
$4.50
Fixed Manufacturing Overhead
$14.60
Unit Product Cost
$52.30
An outside supplier has offered to sell the company all of these parts it needs for
$51.90 a unit. If the company accepts this offer, the facilities now being used to
make the part could be used to make more units of a product that is in high demand.
The additional contribution margin on this other product would be $219,000 per
year.
If the part were purchased from the outside supplier, all of the direct labor cost of
the part would be avoided. However, $6.20 of the fixed manufacturing overhead
cost being applied to the part would continue even if the part were purchased from
the outside supplier. This fixed manufacturing overhead cost would be applied to
the company's remaining products.
Required:
i. How much of the unit product cost of $52.30 is relevant in the decision of
whether to make or buy the part?
ii. What is the net total dollar advantage (disadvantage) of purchasing the part
rather than making it?
iii. What is the maximum amount the company should be willing to pay an outside
supplier per unit for the part if the supplier commits to supplying all 30,000 units
required each year?
5.
Question :

(TCO D) Biello Co. manufactures and sells medals for winners of athletic and
other events. Its manufacturing plant has the capacity to produce 15,000 medals
each month; current monthly production is 14,250 medals. The company normally
charges $115 per medal. Cost data for the current level of production are shown
below.
Variable Costs
Direct Materials
$969,000
Direct Labor
$270,750
Selling and Administrative
$270,075
Fixed Costs
Manufacturing
$370,550
Selling and Administrative
$89,775
The company has just received a special one-time order for 600 medals at $102
each. For this particular order, no variable selling and administrative costs would
be incurred. This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why?