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Miami University / BUS / BUS 2 /

Minnesota Inc provided the following inf… /

ACCA 310 CHAP 2-5 QUIZ MC QUES 쇱

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38. Minnesota Inc. provided the following information regarding its only product--scissors:

Fixed manufacturing costs $425,000

Fixed selling and administrative costs 85,000
Fixed manufacturing costs 72,000
Fixed selling and administrative costs 80,000
Variable manufacturing costs 1,030,000
Variable selling and administrative costs 120,000
Selling unit price 125

Units produced and sold 23,000

Assuming there is excess capacity, the effect of accepting a special order for 1,000 units at a price
of $80.00 per scissors will be _____.

a. net income would increase by $1,000

b. net income would increase by $22,500
c. net income would decrease by $80,000
d. net income would decrease by $200,000

($1,030,000 + $120,000) / 20,000 units = $57.50, therefore,

1,000 x ($80.00 - $57.50) = $22,500

39. Dakota Corporation has been producing and selling 42,000 hats a year. The Dakota Corporation
has the capacity to produce 52,000 hats with its present facilities. The following information is
also available:

Selling price per unit $30

Variable costs per unit:
Manufacturing 13
Selling and Administrative 7
Fixed costs in total:
Manufacturing $128,000
Selling and Administrative 56,000

If a special order is accepted for 10,000 hats at a price of $25 per unit, net income would _____.

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40. Kansas Company produces and sells 20,000 units at $22 per unit. Kansas Company’s product cost
is calculated as follows:

Variable-unit-based costs $10 per unit

Fixed costs $2 per unit
Set-up costs $3 per unit
$15 per unit

A total of 500 set-ups at a cost of $120 per set-up are required to produce the 20,000 units. Kansas
Company has received a special order to sell 5,000 units at $12 per unit. Kansas Company has
excess capacity available, but these 5,000 would require 60 set-ups. If Kansas Company accepts
the special order, Kansas Company’s cost will increase by _____.

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41. A cost is not relevant for decision making if it:

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42. Variable costs will generally be relevant for decision making because they:
A. Differ between options.

B. Are volume-based.

C. Have not been committed and differ between options.

D. Differ between options and have been committed.

E. Measure opportunity cost.

43. Fixed costs will often be irrelevant for decision making because they:

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TERM
Summer '19

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Product Manager, Garcia Company, Kansas Company,
Dana Company

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