| Question Detail:
1)Under a relevant range of production, when total quantities sold increase, total fixed costs
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increase
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decrease
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remain equal
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there is no relationship
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2)Conversion costs are
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only direct material
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only direct labor
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only overhead
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overhead and direct labor
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3)XY Company sells its unique product at $30.00. Variable costs per unit are $20.00. Total fixed sales salaries per month $40,000.00. Other fixed costs per month $60,000.00. Assume that the company wants to change the sales salaries as follows: Total fixed sales salaries per month 25,000. Sales commission of 10% of sales.?Find at what sale-level is the company indifferent between the two alternatives
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$5,000
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5,000 units
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10,000
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7,500 units
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4) AJ Company makes three products.
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?
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?
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?
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Current selling price per unit, variable cost per unit, and machine hours required are as follows:
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?
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?
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Products
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?
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?
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X
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Y
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Z
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Current selling price per unit
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$20
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$30
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$20
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Variable cost per unit
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10
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18
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12
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Machine hours required for each unit
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2
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3
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4
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The company has a maximum of 1000 machine hours available per month.
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Assume the company produces all products; find the total contribution margin per hour.
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5) TC Company makes several printing works using two machines (X and Y).
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Data on the two machines for June 2010 are as follows:
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X
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Y
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Direct material
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10
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15
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Time required for each unit (TR)
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2
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3
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Expected volume during the month (EV)
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2,000
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500
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Expected labor cost per hour
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50
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Budgeted overhead costs
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660,000
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Determine
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The overhead rate per labor hour
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FOAR = $120.00 per hour worked
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FOAR = 120.00 per dollar
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FOAR = $60.00 per hour worked
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FOAR = $120.00 per overhead costs
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6) Assume the cost structure is as follows: TC = 25,000 + 5q, where TC = total costs, q = quantities sold. Under relevant range of sales, selling price per unit is $8.00. Total fixed costs are
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$100,000
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$50,000
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$25,000
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More information is needed
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7) The income statements of Tahany Company for June and July 2005 are as follows:
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June
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July
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Sales
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610
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650
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Cost of goods sold
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420
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460
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Gross margin
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190
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190
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Selling and administrative expenses
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185
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195
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Income before tax
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5
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-5
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Using High Low Method, the variable component of cost of goods sold is
8) Non value added activities are
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Direct material (only)
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Direct labor (only)
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Overhead (only)
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Not essential costs to make/manufacture a product
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9) Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico.
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Managers estimate the following costs per unit (one table)
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Direct material (DM)
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$6.00
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Direct labor (DL)
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$4.00
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Variable manufacturing overhead (VMO)
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$3.00
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Variable administrative expenses (VAE)
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$1.00
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The estimated contribution margin is
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30%
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Monthly fixed costs are
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Manufacturing
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$10,000.00
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Administrative
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$5,000.00
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10) Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico.
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Managers estimate the following costs per unit (one table)
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Direct material (DM)
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$6.00
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Direct labor (DL)
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$4.00
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Variable manufacturing overhead (VMO)
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$3.00
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Variable administrative expenses (VAE)
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$1.00
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The estimated contribution margin is
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30%
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Monthly fixed costs are
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Manufacturing
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$10,000.00
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Administrative
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$5,000.00
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Total unit sold during last month is 2525, what is the total operating income.
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between $100 and $120
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between $120 and $140
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between $140 and $160
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between $160 and $180
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11) BC Company estimates the following data for the coming month: total variable costs $60,000.00, income tax rate 30%, contribution margin percentage 60%. Find the estimated total sales for the coming month.
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$100,000
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$60,000 / 40%
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$60,000 / 60%
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$60,000 X 60%
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12) If a company raises its required net income
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the tax rate will decrease
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break even point is negative
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required contribution margin increases
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required contribution margin decreases
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13)If a company raises its required operating profit
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break even point is negative
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break even point is zero
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required contribution margin increases
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required contribution margin decreases
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14) Copy of
XYZ has three products X, Y and Z. The following information pertains to these products X, Y, and Z. Contribution margin percentages are 40%, 50%, and 40% respectively. Sales mix percentages are 20%, 30%, and 50% respectively. Monthly fixed costs are estimated to be $100.00. The weighted average contribution margin percentage is
15) Which of the following examples is a short term decision?
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Make or buy decision
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Purchase of land
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Issuing bonds
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Joint venture
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Purchase of building
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16) Sales (in units)
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60,000
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Selling price per unit
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25
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Manufacturing costs per unit:
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Materials
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5
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Direct labor
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4
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Overhead
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Variable
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4
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Fixed
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6
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Total
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19
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Gross margin
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6
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Selling and admin. Expenses per unit
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2
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Operating income
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4
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A company in a foreign market offer to buy and the offer specifies the following data
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units to be sold
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10000
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price per unit
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20
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If the Company accepts the special offer, the incremental profit would be
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$70,000.00
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($70,000.00)
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$10,000.00
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($10,000.00)
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17) Total Costs
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Unit Cost
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Direct materials
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20,000
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2.00
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Direct labor
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25,000
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2.50
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Variable overhead
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15,000
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1.50
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Fixed overhead (non-avoidable)
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24000
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2.40
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Fixed overhead (avoidable)
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26,000
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2.60
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Purchase cost
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85,999
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Should the company produce the product internally?
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Yes
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No
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Indifferent to to make or to buy
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Yes if the market price per unit covers the fixed cost per unit.
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18) Sales (in units)
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60,000
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Selling price per unit
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25
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Manufacturing costs per unit:
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Materials
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5
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Direct labor
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4
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Overhead
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Variable
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4
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Fixed
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6
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Total
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19
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Gross margin
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6
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Selling and admin. Expenses per unit (fixed)
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2
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Operating income
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4
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A company in a foreign market offer to buy and the offer specifies the following data
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units to be sold
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10,000
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price per unit
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13.1
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Should the company sell this special order?
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Yes, accept
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No, reject
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Indifferent to reject or not
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Always reject
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Which of the following costs should be considered in short term decisions?
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