25 May Question 81. According to the company’s accounting system, what
Question
81. According to the company’s accounting system, what is the net operating income earned by product V86O?
A) $78,000
B) ($5,000)
C) ($78,000)
D) $5,000
82. What would be the effect on the company’s overall net operating income if product V86O were dropped?
A) Overall net operating income would decrease by $35,000.
B) Overall net operating income would decrease by $5,000.
C) Overall net operating income would increase by $35,000.
D) Overall net operating income would increase by $5,000.
83. If Smithtone chooses to make the part instead of buying it outside, the change in the company’s operating income per year would be:
A) $20,000 decrease.
B) $20,000 increase.
C) $8,000 decrease.
D) $8,000 increase.
84. Assuming other things stay the same, at what price per unit from the outside supplier should Smithtone be indifferent (on economic grounds) to buying or making the part?
A) $8.00
B) $8.50
C) $9.00
D) $9.50
85. Suppose that the idle capacity (floor space and machinery) is presently being rented to another company for $32,000 per year. All the other conditions are still the same. If Smithtone chooses to make the part instead of buying it outside, the net advantage or disadvantage (per year) would be:
A) $15,000 disadvantage.
B) $4,000 advantage.
C) $12,000 disadvantage.
D) $10,000 advantage.
.
86. If Elly Industries continues to use 30,000 units of Part MR24 each month, it would realize a net benefit by purchasing Part MR24 from an outside supplier only if the supplier’s unit price is less than:
A) $14.00
B) $11.00
C) $16.00
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