1. Division 1 has the following information: Sales is $200,000; Variable costs are $130,000; Fixed costs are $100,000; leaving a loss of $30,000. If we drop division 1, 60% of the fixed costs could be saved. Should we drop division 1?

a.	Yes, overall company net income would go up by $30,000

b.	No, overall company net income would go down by $30,000

c.	Yes, overall company net income would go up by $10,000

d.	No, overall company net income would go down by $10,000

2. Should we accept a special order for 1,000 at a selling price of $40 if our variable costs are $15 per unit and there would be an additional fixed costs of $12,000?

a.	Yes, net income would go up by $25,000

b.	No, net income would go down by $25,000

c.	No, net income would go down by $13,000

d.	Yes, net income would go up by $13,000

3. Given the following information, determine the product cost of one unit: Direct Materials = $60; Direct labor = $10; Apply Overhead based on $2 per Direct Labor hour; Direct labor hours is 4 hours per unit.

a.	$70 per unit

b.	$80 per unit

c.	$78 per unit

d.	$85 per unit

Answer rating: 100% (QA)

1 Cost Analysis Contribution margin lost 200000130000 70000 Add Savings from avoidable fixed ... View the full answer