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55.
Ortega Industries manufactures 15,000 components per year. The manufacturing cost of
the components was determined to be as follows:
Direct materials
$150,000
Direct labor
240,000
Variable manufacturing overhead
90,000
Fixed manufacturing overhead
120,000
Total
$600,000
56.
The operations of Ranger Corporation are divided into the Stargate Division and the
Cosmos Division. Projections for the next year are as follows:
Stargate
Division
Cosmos
Division
Total
Sales
$500,000
$360,000
$860,000
Less: Variable
Costs
180,000
200,000
380,000
Contribution
Margin
$320,000
$160,000
$480,000
Less: Direct Fixed
Costs
150,000
125,000
275,000
Segment Margin
$170,000
$35,000
$205,000
Less: Allocated
Common Costs
70,000
55,000
125,000
Operating Income
(Loss)
$100,000
($20,000)
$80,000
Operating income for Ranger Corporation, as a whole, if the Cosmos Division were
dropped would be
57.
The Hammer Division of Excel Company produces hardened sledge hammers. One-third of
Hammer's output is sold to the Government Products Division of Excel; the remainder is
sold to outside customers. Hammer's estimated operating profit for the year is:
Government
Products
Division
Outside
Customers
Sales
$15,000
$40,000
Variable costs
(10,000)
(20,000)
Fixed costs
(3,000)
(6,000)
Operating profits
$2,000
$14,000
Unit sales
10,000
20,000
58.
The Camel Company produces 10,000 units of item Roto 454 annually at a total cost of
$190,000.
Direct materials
$20,000
Direct labor
55,000
Variable overhead
45,000
Fixed overhead
70,000
Total
$190,000
The Yukon Company has offered to supply 10,000 units of Roto 454 per year for $18 per
unit. If Camel accepts the offer, $4 per unit of the fixed overhead would be saved. In
addition, some of Camel's facilities could be rented to a third party for $15,000 per year.
What are the relevant costs for the "make" alternative?
59.
The Camel Company produces 10,000 units of item Roto 454 annually at a total cost of
$190,000.
Direct materials
$20,000
Direct labor
55,000
Variable overhead
45,000
Fixed overhead
70,000
Total
$190,000
60.
61.
62.
The theory of constraints focuses on maximizing throughput contribution margin while
minimizing all of the following except:
63.
The Widner Company manufactures two products: Stainless Serving Spoons and Stainless
Serving Forks. The costs and revenues are as follows:
Spoons
Forks
Sales price
$150
$88
Variable cost per unit
80
42
Total demand for Spoons is 14,000 units and for Forks is 9,000 units. Machine time is a
scarce resource. During the year, 54,000 machine hours are available. Spoons requires 5
machine hours per unit, while Forks requires 3 machine hours per unit.
How many units of Spoons and Forks should Widner produce?
Spoons
Forks
A.
14,000
0
B.
8,307
4,154
C.
10,800
0
D.
5,400
9,000
64.
Morgan Inc has 5,400 machine hours available each month. The following information on
the company's three products is available:
Product
1
Product
2
Product
3
Contribution
margin per unit
$15.00
$18.00
$7.50
Machine hours per
unit
3
2
1
65.
Xenos Inc has 6,600 machine hours available each month. The following information on
the company's three products is available:
Product
1
Product
2
Product
3
Contribution
margin per unit
$20.00
$21.00
$17.50
Machine hours per
unit
2
3
2
If market demand exceeds the available capacity, in what sequence should orders be
filled to maximize the company's profits?
4-52
66.
The Garrison Company manufactures two products: Oxy Cleaner and Sonic Cleaner. The
costs and revenues are as follows:
Oxy
Cleaner
Sonic
Cleaner
Sales Price
$75
$44
Variable cost per
unit
40
21
Total demand for Oxy is 10,000 units and for Sonic is 6,000 units. Machine hours is a
scarce resource. During the year, 50,000 machine hours are available. Oxy requires 4
machine hours per unit, while Sonic requires 2.5 machine hours per unit.
How many units of Oxy and Sonic should Garrison produce?
Oxy Cleaner
Sonic Cleaner
A.
10,000
0
B.
0
6,000
C.
8,750
6,000
D.
10,000
6,000
4-53
67.
The Garrison Company manufactures two products: Oxy Cleaner and Sonic Cleaner. The
costs and revenues are as follows:
Oxy
Cleaner
Sonic
Cleaner
Sales Price
$75
$44
Variable cost per
unit
40
21
4-54
68.
Zantaq Inc has 5,400 machine hours available each month. The following information on
the company's three products is available:
Bookcases
Chairs
Side
Tables
Contribution
margin per unit
$15.00
$18.00
$7.50
Machine hours per
unit
3
2
1
The market demand is limited to 2,000 units of each of the three products. How many
units of each should Zantaq produce and sell?
Bookcases
Chairs
Side Tables
A.
2,000
2,000
2,000
B.
0
2,000
2,000
C.
0
2,000
1,400
D.
1,800
0
0
69.
Zantaq Inc has 5,400 machine hours available each month. The following information on
the company's three products is available:
Bookcases
Chairs
Side
Tables
Contribution
margin per unit
$15.00
$18.00
$7.50
Machine hours per
unit
3
2
1
Topic: Use of Differential Analysis for Production Decisions
70.
Warrior Inc has 12,000 machine hours available each month. The following information on
the company's four products is available:
Product
W
Product
X
Product
Y
Product
Z
Selling
price per
unit
$20.00
$21.00
$17.50
$15.00
Variable
cost per
unit
$10.00
$9.00
$7.50
$10.00
Machine
hours per
unit
2
3
4
1.5
71.
The Tire Division of Traker Company produces tires for off-road sport vehicles. One-third
of Tire's output is sold to an internal division of Traker; the remainder is sold to outside
customers. Tire's estimated operating profit for the year is:
Internal
Outside
Sales
$150,000
$400,000
Variable costs
100,000
200,000
Fixed costs
30,000
60,000
Operating profits
$20,000
$140,000
Unit sales
10,000
20,000
72.
The Tire Division of Traker Company produces tires for off-road sport vehicles. One-third
of Tire's output is sold to an internal division of Traker; the remainder is sold to outside
customers. Tire's estimated operating profit for the year is:
Internal
Outside
Sales
$150,000
$400,000
Variable costs
100,000
200,000
Fixed costs
30,000
60,000
Operating profits
$20,000
$140,000
Unit sales
10,000
20,000
73.
The Bogart Company produces 5,000 units of item SLM 46 annually at a total cost of
$200,000.
Direct materials
$20,000
Direct labor
55,000
Variable overhead
45,000
Fixed overhead
80,000
Total
$200,000
74.
The Bogart Company produces 5,000 units of item SLM 46 annually at a total cost of
$200,000.
Direct materials
$20,000
Direct labor
55,000
Variable overhead
45,000
Fixed overhead
80,000
Total
$200,000
