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157) Cornell Enterprises currently produces several products. Model L78 is showing a net operating loss as indicated by the following condensed income statement prepared for the year ended December 31. You have been hired by Cornell Enterprises to help analyze the decision as to whether to eliminate Model L78. Upon investigation,.
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31) Variable costs are irrelevant to a special decision when those variable costs differ between alternatives. 32) Managers should consider the potential effect of a special order on long-run profits and operations. 33) When deciding whether to accept a special order, managers need to consider whether they have available excess capacity. 34) If.
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64) Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $50 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the golfing season. About 400,000.
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94) Which of the following pairs are characteristics of price-takers? A) Less competition and target pricing B) Cost-plus pricing and less competition C) Target costing and heavy competition D) Cost-plus pricing and lack of product uniqueness 95) Which of the following pairs are characteristics of price-setters? A) Less competition and target costing B) Cost-plus pricing and less.
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49) Neeley Incorporated had the following fixed costs: Fixed manufacturing costs $ 98,000 Fixed marketing costs $ 40,000 Fixed administrative costs $ 18,000 The company also had the following variable costs: Variable manufacturing costs$ 124,000 Variable marketing costs$   30,000 Variable administrative costs$   28,000 The company produced and sold 55,000 units of the product during the year at a.
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1) Irrelevant costs are costs that do not affect short-term decisions. 2) Relevant information is future data that do not differ among alternatives. 3) Management accountants gather and analyze relevant information to compare alternatives. 4) One key to analyzing short-term business decisions is to focus on relevant revenues, costs and profits. 5) One key.
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201) Papa Pastries sells Donuts, Muffins, and Mixed Dozens. It sold 10,000 dozens last year. Mixtures outsold Muffins by a margin of 2 to 1. Sales of Donuts were the same as sales of Mixtures. Fixed costs for Papa Pastries are $19,600 and additional information follows: Product Unit Sales Prices Unit Variable Cost Dozen.
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101) Cedar Mills Incorporated has a predicted operating income of $72,000. Its total variable expenses are $20,000 and its total fixed expenses are $32,000. It has a unit contribution margin of $10. Cedar Mills' breakeven sales in units is A) 8,400. B) 10,400. C) 4,000. D) 12,400. 102) Cedar Mills Incorporated desires an operating income.
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248) Heavenly Cupcakes has a monthly target operating income of $12,000. Variable expenses are 40% of sales and monthly fixed expenses are $8,000. Requirements: a.What is the monthly margin of safety in dollars if the business achieves its operating income goal? b.What is the monthly margin of safety as a percentage of.
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153) Black Productions has three models: D, E, and F. The following information is available:   Model D Model E Model F Sales revenue $65,000 $33,000 $24,000 Variable expenses $32,000 $13,000 $14,000 Contribution margin $33,000 $20,000 $10,000 Fixed expenses $16,000 $16,000 $16,000 Operating income (loss) $17,000 $4,000 $(6,000) Black Productions is thinking of discontinuing model F because it is reporting an operating loss. All fixed costs are unavoidable. Black Productions discontinues model F and rents.
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113) From a purely financial standpoint, if a product line has a negative contribution margin, the product line should be discontinued. 114) Fixed costs that exist even after a product is discontinued are called unavoidable fixed costs. 115) When deciding whether to discontinue a product, managers should only consider the costs that.
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41) Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats per year. The following information relates to current production: Sale price per unit $400 Variable costs per unit:      Manufacturing $220      Marketing and administrative $50 Total fixed costs:     Manufacturing $750,000     Marketing.
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84) When setting prices, managers need to consider all costs. 85) Managers need to consider variable costs, fixed costs, inventoriable product costs and period costs when setting prices. 86) Cost-plus pricing is essentially the opposite of target-costing. 87) Which of the following best describes "target costing"? A) An approach to pricing that.
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104) Philadelphia Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $30 million of assets. The company primarily incurs fixed costs to maintain the swimming pool. Fixed costs are projected to be $12,500,000 for the year. About 500,000 members are.
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61) Pluto Incorporated provided the following information regarding its single product: Direct materials used $ 240,000 Direct labor incurred $ 420,000 Variable manufacturing overhead $ 160,000 Fixed manufacturing overhead $ 100,000 Variable selling and administrative expenses $ 60,000 Fixed selling and administrative expenses $ 20,000 The regular selling price for the product is $80. The annual quantity of units produced and sold is.
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117) CVP analysis helps managers prepare for and respond to economic changes, such as increasing costs and pressure to drop sales price. 118) If all other factors are constant, any decrease in fixed costs will decrease the breakeven point. 119) Holding all other factors constant, the breakeven point will always double if.
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21) The format of the income statement most useful in decision-making is which of the following? A) Absorption costing format B) Traditional format C) Contribution margin format D) Single-step format 22) Ida Enterprises is considering replacing a machine that is presently used in its production process. The following information is available: Old Machine Replacement Machine Original cost $60,000 $35,000 Remaining.
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51) Samson Incorporated provided the following information regarding its only product: Sale price per unit $50.00 Direct materials used $160,000 Direct labor incurred $185,000 Variable manufacturing overhead $120,000 Variable selling and administrative expenses $70,000 Fixed manufacturing overhead $65,000 Fixed selling and administrative expenses $12,000 Units produced and sold 20,000 Assume no beginning inventory Assuming there is excess capacity, what would be the effect on operating income of accepting.
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147) Scott Incorporated management has budgeted the following amounts for its next fiscal year: Total fixed expenses $585,000 Selling price per unit $50 Variable expenses per unit $22 If fixed expenses increase by 10%, to maintain the original breakeven sales in units, the selling price per unit would have to be A) increased by 17.60%. B) increased by 105.60%. C).
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143) The income statement for Lovely Locks is divided by its two product lines, Curling Irons and Straighteners, as follows:   Curling Irons Straighteners Total Sales revenue $600,000 $260,000 $860,000 Variable expenses $450,000 $210,000 $660,000 Contribution margin $150,000 $50,000 $200,000 Fixed expenses $75,000 $75,000 $150,000 Operating income (loss) $75,000 $(25,000) $50,000 If Lovely Locks can eliminate fixed costs of $32,000 and increase the sale of Curling Irons by 6,000 units at a selling price of.
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202) Kent Coffee Haus sells Drip Coffee, Cappuccino, or Lattes. It sold 20,000 total cups of various coffee products last year. Drip Coffee outsold Cappuccino 2 to 1. Sales of Lattes were the same as sales of Drip Coffee. Fixed costs for the company are $15,000 and additional information follows: Product Unit.
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213) A company's margin of safety can be stated A) in units. B) in dollars. C) as a percentage of sales. D) any of the above. 214) A company's margin of safety is computed as A) actual sales—expected sales. B) expected sales—actual sales. C) expected sales—sales at breakeven. D) sales at breakeven—expected sales. 215) All else being equal, a company.
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72) Heinz Manufacturing produces Item Q with variable manufacturing costs of $12/unit. The selling price of Item Q is $15/unit. The fixed manufacturing overhead cost is $72,000. A normal production run includes 100,000 units. Heinz Manufacturing has discovered an additional process to change Item Q into Item QR. Additional costs.
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157) Star Corporation management has budgeted the following amounts for its next fiscal year: Total fixed expenses $450,000 Selling price per unit $50 Variable expenses per unit $25 If Star Corporation spends an additional $20,000 on advertising, sales volume should increase by 3,000 units. What effect will this have on operating income? A) Increase of $75,000 B) Increase of.
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73) Heinz Manufacturing produces Item Q with variable manufacturing costs of $12/unit. The selling price of Item Q is $15/unit. The fixed manufacturing overhead cost is $72,000. A normal production run includes 100,000 units. Heinz Manufacturing has discovered an additional process to change Item Q into Item QR. Additional costs.
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91) Martin Enterprises provides the following information about its single product. Targeted operating income $50,830 Selling price per unit $6.55 Variable cost per unit $4.25 Total fixed cost $94,070 What is the breakeven point in units? A) 22,100 B) 8,710 C) 40,900 D) 4,706 92) Martin Enterprises provides the following information about its single product. Targeted operating income $50,830 Selling price per unit $6.55 Variable cost per unit $4.25 Total fixed.
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127) If the fixed costs increase while the sales price per unit and variable costs per unit remain constant, which of the following statements is true? A) The contribution margin stays the same and the breakeven point increases. B) The contribution margin decreases and the breakeven point increases. C) The contribution margin stays.
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187) Sandy Incorporated sells two products, larges and smalls. Larges sell for $90 per unit with variable costs of $60 per unit. Smalls sell for $30 per unit with variable costs of $10 per unit. Total fixed costs for the company are $41,600. Sandy Incorporated typically sells three larges for.
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133) Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Total Luxury Sporty Sales revenue $490,000 $360,000 $130,000 Variable expenses 355,000 235,000 120,000 Contribution margin 135,000 125,000 10,000 Fixed expenses 76,000 38,000 38,000 Operating income (loss) $59,000 $87,000 $(28,000) Assuming the Sporty line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Sporty line is used to.
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11) An "opportunity cost" is best described by which of the following? A) Benefits foregone by choosing a particular alternative course of action B) Costs that were incurred in the past and cannot be changed C) The distribution of all products to be sold D) Expected future costs that differ among alternatives 12) A "relevant.
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233) Stanley's Candies is considering building a new plant in Europe. It predicts sales at the new plant to be 40,000 units at $4.00/unit. Below is a listing of estimated expenses: Category Total Annual Expenses % of Annual Expense that are Fixed Materials $20,000 10% Labor $30,000 20% Overhead $50,000 40% Marketing/Admin $10,000 60% A European firm was contracted to sell the product and will receive.
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68) Revved Up Toys manufactures a computer chip used in the production of remote control cars. When 6,000 cars are produced, the costs per part are: Direct materials $2.50 Direct labor 1.50 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 1.75 Total $6.75 Sam's Associates has offered to sell Revved Up Toys 6,000 parts for $5.75 each. If Sarah.
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223) Hyde's Headphones sells deluxe headphones for $75 each. Unit variable expenses total $45. The breakeven sales in units is 2,400 and budgeted sales in units is 4,200. What is the margin of safety in dollars? A) $24 B) $135,000 C) $495,000 D) $1,800 224) Moe's Pizza Shop sells a large pizza for $11.50. Unit.
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123) A drug store decides to discontinue its health and beauty section of products because it has been unprofitable. This strategy could backfire because A) the store can readily fill the available space. B) the store's sales may suffer by not having this convenience category of products. C) it has automatically saved that.
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115) Haines Corporation has a predicted operating income of $80,000. Its total variable expenses are $25,000 and its total fixed expenses are $24,000. The company has a unit contribution margin of $20 on its sole product. a.Calculate the break-even in sales units. b.Calculate the break-even in sales units if the company's.
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111) Barbara's Candles provides the following information about its single product. Targeted operating income $55,000 Selling price per unit $100.00 Variable cost per unit $60.00 Total fixed cost $90,000 How many units must be sold to earn the targeted operating income? A) 1,375 B) 3,625 C) 2,250 D) 906 112) Martin Enterprises has a predicted operating income of $140,000. Its total variable expenses are.
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74) Companies operating in highly competitive industries are generally price-setters. 75) When setting prices, a company need not consider whether it is a price-taker or a price-setter for each product that it sells. 76) A price-setter company emphasizes a cost-plus approach to pricing. 77) For a product, revenue at market price plus desired.
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166) Lewis Enterprises management has budgeted the following amounts for its next fiscal year: Total fixed expenses $500,000 Selling price per unit $1,000 Variable expenses per unit $750 Requirements: a.If Lewis Enterprises can reduce fixed expenses by $25,000, how will breakeven sales in units be affected? b.If Lewis Enterprises spends an additional $1,000 on advertising, sales volume should increase.
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