Al Madinah Tire Company is considering the following alternatives: Alternative 1 Alternative 2 Revenues OMR 120,000 OMR 115,000 Shipping costs 60,000 70,000 Repair costs 45,000 25,000 When looking at repair costs, choosing Alternative 2 will affect net income by a: Select one: O a. None of the answers are correct Ob. 20,000 increase O c. 5,000 increase O d. 20,000 decrease O e. 10,000 decrease

Al Madinah Tire Company is considering the following alternatives: Alternative 1 Alternative 2 Revenues OMR 120,000 OMR 115,000 Shipping costs 60,000 70,000 Repair costs 45,000 25,000 When looking at repair costs, choosing Alternative 2 will affect net income by a: Select one: O a. None of the answers are correct Ob. 20,000 increase O c. 5,000 increase O d. 20,000 decrease O e. 10,000 decrease

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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The Alligator segment of Carla Vista Specialty Meats is operating at a loss and has the following data: Sales S 576000 Variable expenses 403200 Fixed expenses 288000 If the Alligator segment is eliminated, what will be the effect on the remaining company? Assume that 50% of the fixed expenses will be eliminated and the rest will be allocated to the segments of the remaining company. Select answer from the options below $28800 increase. $28800 decrease. $345600 increase. $144000 increase.
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Department A $ 350,000 120,000 230,000 140,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Multiple Choice O $(133,800) The company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 6%. What is the financial advantage (disadvantage) of discontinuing Department B? O $(128,000) $(113,800) Total $ 800,000 320,000 480,000 400,000 $ 80,000 O $(124,000) Department B $ 450,000 200,000 250,000 260,000 $90,000 $ (10,000)
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A firm sell a single product for $6. Its variable cost per unit is $4 and fixed costs are $50. Ignoring income taxes, the amount of sales revenue needed for $20 profit is Select one: a. $210. b. $150. c. $35. d. $25.
Match the descriptions 1 through 5 with labels a through e on the CVP chart. Dollars $25,000 $20,000 $15,000 $10,000 $5,000 $0 1. Break-even point 2. Total sales line 3. Loss area 4. Profit area 5. Total costs line (b) 200 400 600 (c) (d) (a) (e) 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 Units produced and sold
Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million.
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Multiple Choice O The company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 12%. What is the financial advantage (disadvantage) of discontinuing Department B? O O O $(148,000) $(152,000) $(147,600) Total $ 800,000 320,000 $(127,600) 480,000 400,000 $ 80,000 Department A Department B $ 350,000 $ 450,000 120,000 200,000 230,000 250,000 260,000 140,000 $ 90,000 $ (10,000)
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A company has three product lines, one of which reflects the following results: Sales Variable expenses Contribution margin Fixed expenses Net loss O decrease by $4000. O increase by $4000 decrease by $82000 $181000 99000 O increase by $48000 82000 130000 If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will $ (48000)