10 May WHAT WAS THE WEST DIVISION’S MINIMUM REQUIRED RETURN IN MARCH?
Aide Industries is a division of a major corporation. Data concerning the most recent year appears below: The division’s margin is closest to: 21.8% 5.0% 23.0% 28.0% Chace Products is a division of a major corporation. Last year the division had total sales of $21 300 000 net operating income of $575 100 and average operating assets of $5 000 000. The company’s minimum required rate of return is 12%. The division’s margin is closest to: 26.2% 23.5% 2.7% 11.5% Chace Products is a division of a major corporation. Last year the division had total sales of $21 300 000 net operating income of $575 100 and average operating assets of $5 000 000. The company’s minimum required rate of return is 12%. The division’s return on investment (ROI) is closest to: 49.0% 11.5% 0.3% 2.2% The West Division of Shekarchi Corporation had average operating assets of $620 000 and net operating income of $80 100 in March. The minimum required rate of return for performance evaluation purposes is 14%. What was the West Division’s minimum required return in March? $80 100 $86 800 $11 214 $98 014 Chace Products is a division of a major corporation. Last year the division had total sales of $21 300 000 net operating income of $575 100 and average operating assets of $5 000 000. The company’s minimum required rate of return is 12%. The division’s turnover is closest to: 3.82 4.26 0.12 37.04 Chace Products is a division of a major corporation. Last year the division had total sales of $21 300 000 net operating income of $575 100 and average operating assets of $5 000 000. The company’s minimum required rate of return is 12%. The division’s residual income is closest to: $575 100 $1 175 100 $(1 980 900) $(24 900) Two alternatives code-named X and Y are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below. Are the materials costs and processing costs relevant in the choice between alternatives X and Y? (Ignore the equipment rental and occupancy costs in this question.) Only materials costs are relevant Only processing costs are relevant Both materials costs and processing costs are relevant Neither materials costs nor processing costs are relevant Ahsan Company makes 60 000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: An outside supplier has offered to sell the company all of these parts it needs for $45.70 a unit. If the company accepts this offer the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $318 000 per year. If the part were purchased from the outside supplier all of the direct labor cost of the part would be avoided. However $3.50 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company’s remaining products. How much of the unit product cost of $40.50 is relevant in the decision of whether to make or buy the part? $40.50 $15.20 $27.90 $37.00 The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720 000. If these microcomputers are upgraded at a total cost of $100 000 they can be sold for a total of $160 000. As an alternative the microcomputers can be sold in their present condition for $50 000. Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition? $100 $770 $300 $210 The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720 000. If these microcomputers are upgraded at a total cost of $100 000 they can be sold for a total of $160 000. As an alternative the microcomputers can be sold in their present condition for $50 000. What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition? $110 000 advantage $660 000 disadvantage $10 000 advantage $60 000 advantage Peluso Company a manufacturer of snowmobiles is operating at 70% of plant capacity. Peluso’s plant manager is considering making the headlights now being purchased from an outside supplier for $11 each. The Peluso plant has idle equipment that could be used to manufacture the headlights. The design engineer estimates that each headlight requires $4 of direct materials $3 of direct labor and $6.00 of manufacturing overhead. Forty percent of the manufacturing overhead is a fixed cost that would be unaffected by this decision. A decision by Peluso Company to manufacture the headlights should result in a net gain (loss) for each headlight of: $(2.00) $1.60 $0.40 $2.80 Part S00 is used in one of Morsey Corporation’s products. The company makes 6 000 units of this part each year. The company’s Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $1.40 Direct labor $2.40 Variable manufacturing overhead $7.20 Supervisor’s salary $3.60 Depreciation of special equipment $8.90 Allocated general overhead $4.50 An outside supplier has offered to produce this part and sell it to the company for $16.10 each. If this offer is accepted the supervisor’s salary and all of the variable costs including direct labor can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier’s offer were accepted only $6 000 of these allocated general overhead costs would be avoided. If management decides to buy part S00 from the outside supplier rather than to continue making the part what would be the annual impact on the company’s overall net operating income? Net operating income would decrease by $3 000 per year. Net operating income would decrease by $71 400 per year. Net operating income would decrease by $77 400 per year. Net operating income would decrease by $65 400 per year. Two alternatives code-named X and Y are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below. .png” src=”file:///C:/Users/Pals/AppData/Local/Temp/OICE_B929E1A6-126E-4ABA-B665-8B4CFD8C76A9.0/msohtmlclip1/01/clip_image002.png”> What is the differential cost of Alternative Y over Alternative X including all of the relevant costs? $103 000 $39 000 $142 000 $122 500 Lusk Company produces and sells 15 000 units of Product A each month. The selling price of Product A is $20 per unit and variable expenses are $14 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that $70 000 of the $100 000 in fixed expenses charged to Product A would continue even if the product was discontinued. These data indicate that if Product A is discontinued the company’s overall net operating income would: decrease by $60 000 per month increase by $10 000 per month increase by $20 000 per month decrease by $20 000 per month The management of Freshwater Corporation is considering dropping product C11B. Data from the company’s accounting system appear below: .png” src=”file:///C:/Users/Pals/AppData/Local/Temp/OICE_B929E1A6-126E-4ABA-B665-8B4CFD8C76A9.0/msohtmlclip1/01/clip_image004.png”> All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further investigation has revealed that $211 000 of the fixed manufacturing expenses and $122 000 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued. According to the company’s accounting system what is the net operating income earned by product C11B? $74 000 $(521 000) $(74 000) $521 000
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