44. JetSky Airways has three divisions, the Western Division, the Eastern Division, and the NorthernDivision. The manager of the Western Division had wanted to purchase replacement airplanesfor the division. However, he decided against it because, although revenues would increase andthe new planes would be less expensive to operate, the initial cost of the planes was quite large.The Western Division is most probably accounted for as a(n) *cost center.None of these.O revenue center.investment center.profit center.

Investment: It is the amount a person or a company invest it in any security or fixed assets to…

Answered: 44. JetSky Airways has three divisions,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Alternative A Alternative B Projected revenue $ 125,000 $ 150,000 Unit-level costs 25,000 36,000 Batch-level costs 12,500 24,000 Product-level costs 15,000 17,000 Facility-level costs 10,000 12,500 What is the differential revenue for this decision? Multiple Choice $50,000 $25,000 $125,000 $150,000
5 In an effort to increase profits, Pegasus Airlines is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (175 seats x 40% occupancy × $200 ticket price). Variable expenses ($15 per person) Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation of aircraft Fuel for aircraft Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating loss $ 14,000 1,050 12,950 $ 1,800 750 1,550 5,800 4,200 1,500 1,700 300 17,600 $ (4,650) 100.0% 7.5 92.5% The following additional information is available about flight 482: a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete. b. One-third of the liability insurance is a…
A firm currently has extra warehouse space that it is renting out to a 3rd party for $10,000 a month. Due to higher than expected growth, the firm would like to expand and would like to use this warehouse space that is currently being rented to the 3rd party. Which of the following is true? This is an externality and should be included This is an externality and should not be included This is an opportunity cost and should be included This is an opportunity cost and should not be included This is an sunk cost and should be included This is an sunk cost and should not be included
806Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding, that has not been as profitable as planned. Since Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $200 selling price per 100 yards of XT rope. Its fixed costs for the year are expected to be $270,000, up to a maximum capacity of 700,000 yards of rope. Forecasted variable costs are $140 per 100 yards of XT rope.RequiredEstimate Product XT’s break-even point in terms of (a) sales units and (b) sales dollars.Check (1a) Break-even sales, 4,500 unitsPrepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product XT at the break-even point.
8
Required information [The following information applies to the questions displayed below.] Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division's standard variable production cost per unit is $550. The division has no excess capacity, and it could sell all of its components to outside buyers at $770 per unit in a perfectly competitive market. Required: 1. Determine a transfer price using the general rule. Transfer price
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Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known for its excellent quality and innovation. Recently, the firm conducted a relevant cost analysis of one of its product lines that has only two products, T-1 and T-2. The sales for T-2 are decreasing and the purchase costs are increasing. The firm might drop T-2 and sell only T-1. Barbour allocates fixed costs to products on the basis of sales revenue. When the president of Barbour saw the income statements (see below), he agreed that T-2 should be dropped. If T-2 is dropped, sales of T-1 are expected to increase by 10 percent next year, but the firm's cost structure will remain the same. Sales Variable costs: Cost of goods sold Selling & administrative Contribution margin Fixed expenses: Fixed corporate costs. Fixed selling and administrative Total fixed expenses Operating income Required: T-1 $ 200,000 70,000 20,000 $ 110,000 58,700 14,300 $ 73,000 T-2 $ 260,000 130,000 50,000 $ 80,000…
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17. A company has a process that results in 21000 pounds of product A…
Pepper’s Automotive (see Brief Exercise 18-19) has further analyzed the exhaust systemdivision into three products: exhaust pipes, intake valves, and intake pipes. The incomestatement is available below.If intake valves were dropped, what would be the change in profits in the short run and thelong run, respectively?[LO 18-4]Exhaust Pipes Intake Valves Intake PipesNet revenues $500,000 $300,000 $200,000Variable costs 50,000 150,000 100,000Contribution margin 450,000 150,000 100,000Controllable fixed costs 50,000 50,000 0Controllable margin 400,000 100,000 100,000Noncontrollable fixed costs 100,000 150,000 50,000Contribution by profit center $300,000 $ (50,000) $ 50,000a. Short run: $100,000 decrease; long run: $50,000 increaseb. Short run: $150,000 increase; long run: $50,000 decreasec. Short run: $100,000 increase; long run: $50,000 decreased. Short run: $50,000 increase; long run: $100,000 decrease

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