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company has sufficient capacity to produce the additional units, acceptance of the special<br />
order would affect net income as follows:<br />
Income would increase by $40,000.<br />
Income would decrease by $8,000.<br />
Income would increase by $140,000.<br />
Income would increase by $8,000.<br />
Multiple Choice Question 70<br />
Carter, Inc. can make 100 units of a necessary component part with the following costs:<br />
Direct Materials $120,000<br />
Direct Labor 20,000<br />
Variable Overhead 60,000<br />
Fixed Overhead 40,000<br />
If Carter can purchase the component externally for $220,000 and only $10,000 of the fixed<br />
costs can be avoided, what is the correct make-or-buy decision?<br />
Buy and save $30,000<br />
Make and save $10,000<br />
Buy and save $10,000<br />
Make and save $30,000<br />
Multiple Choice Question 84<br />
A company has a process that results in 15,000 pounds of Product A that can be sold for<br />
$16 per pound. An alternative would be to process Product A further at a cost of $200,000<br />
and then sell it for $28 per pound. Should management sell Product A now or should<br />
Product A be processed further and then sold? What is the effect of the action?<br />
Sell now, the company will be better off by $20,000.<br />
Sell now, the company will be better off by $200,000.
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