28. Wagner Company sells Product A for $21 per unit. Wagner's unit product cost based on...

 

Transcribed Image Text:

28. Wagner Company sells Product A for $21 per unit. Wagner's unit product cost based on the full capacity of 200,000 units is as follows: Direut Materiala Direat Labour Mametring Overhead Uinit Product Cost 54 A special order offering to buy 20,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $3 per unit for shipping. Wagner has sufficient idle capacity to manufacture the additional units. Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labour is an avoidable cost in this decision. In negotiating a price for the special order, what should be the minimum acceptable selling price per unit? A. $14. B. $15. C. S16. D. $18. 29. A study has been conducted to determine if Product A should be dropped. Total sales of the product are $200,000 per year; total variable expenses are $140,000 per year. Total fixed expenses charged to the product are $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall operating income per year would change by how much? A. A decrease of S10,000. B. An increase of $20,000. C. A decrease ofr s20,000. D. An increase of $30,000. 30. Why are the net present value and internal rate of retum methods of capital budgeting superior to the payback method? A. Because they are easier to implement. B. Because they consider the time value of money. C. Because they require less input. D. Because they reflect the effects of depreciation and income taxes. 31. The net present value method takes into account which of the following? Cash Flow over Time Value Life of Proiest of Money No No Yes Yes A) Yes B) C) D) No No Yes A. Option A B. Option B C. Option C D. Option D 28. Wagner Company sells Product A for $21 per unit. Wagner's unit product cost based on the full capacity of 200,000 units is as follows: Direut Materiala Direat Labour Mametring Overhead Uinit Product Cost 54 A special order offering to buy 20,000 units has been received from a foreign distributor. The only selling costs that would be incurred on this order would be $3 per unit for shipping. Wagner has sufficient idle capacity to manufacture the additional units. Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labour is an avoidable cost in this decision. In negotiating a price for the special order, what should be the minimum acceptable selling price per unit? A. $14. B. $15. C. S16. D. $18. 29. A study has been conducted to determine if Product A should be dropped. Total sales of the product are $200,000 per year; total variable expenses are $140,000 per year. Total fixed expenses charged to the product are $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall operating income per year would change by how much? A. A decrease of S10,000. B. An increase of $20,000. C. A decrease ofr s20,000. D. An increase of $30,000. 30. Why are the net present value and internal rate of retum methods of capital budgeting superior to the payback method? A. Because they are easier to implement. B. Because they consider the time value of money. C. Because they require less input. D. Because they reflect the effects of depreciation and income taxes. 31. The net present value method takes into account which of the following? Cash Flow over Time Value Life of Proiest of Money No No Yes Yes A) Yes B) C) D) No No Yes A. Option A B. Option B C. Option C D. Option D

Answer rating: 100% (QA)

Solution for Question 28 Answer Option A 14 Explanation Direct Materials 4 Direct Labour 5 Manufactu... View the full answer