Questions 5 and 6 refer to the following information: y ofered to bxy 4810 units
ID: 2509816 • Letter: Q
Question
Questions 5 and 6 refer to the following information: y ofered to bxy 4810 units of a product from X Company for a special price of 110 ah to the 68,400 units of the product that X Company instead of the company's regular price. The following information relates has already made and sold to its regular customers Total Per-Unit 1,299,600 19.00 Revenue Cost of Goods Sold 6.20 2.17 424,080 Variable Fixed 148,428 90,288 $556,776 Seling and Administrative Costs 132 Variable Fixed Profit The special order product bas soame unigne estures that will require additional material costs of 80.71 per unit and the rental of special equipment for $3,500 ps. Profit on the special ondr would be 5, AO ss,332 ? ssoas co s6808 DOST,603 EOss,004 Fe"824 S pt6. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with mand falling by 600 anits. This lkoss in sales will cause firm profits to fall by p The flowving lnscrmation i for X Company's two products, A and B Product A Product B Revenue Total contribution margin Total fixed costs Profit $91,000 37,310 52,070 $12,600 8-14,760 $89,000 37,380 24,780 Product cost increase 877 of Product A's fixed costs are avoidable; S28 118 of Product B's fixed costs are avoidable. X Company plans to drop B sinoe it shows a loss and increase sales of Product A by $27,300. Accompanying the sales increase will be a fixed E $3,000. If X Company drops Product B and increases Product A sales, what will be the effect on firm proits? $$49 BO $1,061 ?? $1,326 DO $1,658 EO$2,072 FO$3.soo 8 pt X Company curreatly makes 6,000 units of a component part each year, but is considering buying it from a supplier for current annual cost of making the part is $54,600. The supplier wants X Company to sign a contract for the If x Company buys the part, it will be able to sell the equipmeat that it currently uses to make the part for egaipment will have no salvage value at the end of five years. Assuming a discount rate of 3%, what is the 12,000, bat the net prewent value of baying the part instend of making it? 8. AO $19,744 BO 4 BO $22,310 CO 25,211 DO S2848S EO S32191 FO $6,176Explanation / Answer
Answeer is F $9824 Explanation: Incremental analysis: Incremntal revenue (4810 units @ 11) 52910 Less: Incremental cost Variable c cost of goods sold (4810 units @ 6.20) 29822 Additional maetrial cost (4810 units @ 0.71) 3415.1 Varriable selling OH (4810 units @ 1.32) 6349.2 Less: Additional rental of equipment 3500 Net Income 9823.7 Answer is C. $ 6888 Explanation: Selling prie pe unit 19 less: variable cost per unit 7.52 Contribution margin 11.48 Number of sales units lost 600 Loss of income 6888 Answer is C. - $ 1326 Explanation: Incrementla analysis: Sales of Product A (89000+27300) 116,300 CM ratio (37380/89000*100) 42% Contribution earned 48846 Less: Fix ed cost of A (24780+3600) 28380 Less: Unavoidable cost of B (52070-28118) 23952 Net Loss -3486 Earlier loss -2160 Net Decrease in income -1326 Answer is D. $ 28488 Explanation: Saving in buying: Cost of buying (6000*8.50) 51000 Less: manufacturing cost 54600 Savngs in cost 3600 Aannuity factor for 5 years at 3% 4.5797 Present value of savings in cost 16486.92 Add: Equipment sold 12000 Net present value 28486.92
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