The choice of reworking the unit would be Alderon Ltd. has 1,200 defective units of aproduct that cost $3.50 per unit in direct costsand $7.10 per unit in indirect costs whenproduced last year. The units can be sold asscrap for $4.80 per unit or reworked at anadditional cost of $3.10 per unit and sold atthe full price of $13.50.The incremental net income (loss) from thechoice of reworking the units would be

Explanation of Incremental Net Income (Loss):Incremental net income (loss) refers to the additional…

Answered: Alderon Ltd. has 1,200 defective units…

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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Cornell Enterprises currently produces several products. Model L78 is showing a net operating loss as indicated by the following condensed income statement prepared for the year ended December 31. You have been hired by Cornell Enterprises to help analyze the decision as to whether to eliminate Model L78. Upon investigation, you discover that if Model L78 is eliminated, $20,000 of the fixed costs shown on the above condensed income statement can be eliminated. The rest of the fixed costs allocated to Model L78 are common fixed costs that will be allocated to the remaining two products produced by Cornell Enterprises. Determine if Cornell Enterprises should discontinue Model L78.
Phan Company has not reported a profit in five years. This year the company would like to narrow its loss to $7,500. Assuming its selling price is $36.50 per unit and its variable costs per unit are $24, how many units must be sold to achieve its target given that total fixed costs are $60,000?
Garcia Company has 10,400 units of its product that were produced at a cost of $156,000. The units were damaged in a rainstorm. Garcia can sell the units as scrap for $31,200, or it can rework the units at a cost of $49,600 and then sell them for $65,300. (a) Prepare a scrap or rework analysis of income effects. (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should: F1 2 W S F2 # 3 E D 80 F3 MAR 29 $ 4 Scrap (0) R a F4 % 5 Rework ON F7 DII 8 1 FB ( 9 F9 F G H J K
Sheridan Company sells product 2005WSC for $65 per unit. The cost of one unit of 2005WSC is $62, and the replacement cost is $61. The estimated cost to dispose of a unit is $6, and the normal profit is 40% of selling price. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market? a.) $61. b.) $59. c.) $62. d.) $33.
Garcia Company has 10,500 units of its product that were produced at a cost of $157,500. The units were damaged in a rainstorm. Garcia can sell the units as scrap for $21,000, or it can rework the units at a cost of $39,500 and then sell them for $52,000. (a) Prepare a scrap or rework analysis of income effects. (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units Cost of reworked units Income $ 0 $ 0 Incremental income (b) The company should:
North Ryde Company has established a profit objective of $364,000 before income tax. Its product sells for $60 per unit. The variable cost to produce and sell the product is $48 per unit. The fixed cost of this operation is $428,000. The number of units of product that must be sold to achieve the profit objective is
Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $500,000, variable expenses of $370,000, and fi xed expenses of $150,000. Therefore, the gloves and mittens line had a net loss of $20,000. If Gator eliminates the line, $38,000 of fi xed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line.
Oriole Company sells product 1976NLC for $31.00 per unit. The cost of one unit of 1976NLC is $30, and the replacement cost is $29.00. The estimated cost to dispose of a unit is $4.00, and the normal profit is 40% of the selling price. At what amount per unit should product 1976NLC be reported, applying lower-of-cost-or-market? $29.00. $27.00. $30.00.
Last year Kijel Company introduced a new product and sold 25,600 units of it at a price of $92 per unit. The product's variable expenses are $62 per unit and its fixed expenses are $839,400 per year. What was this product's net operating income (loss) last year?
Varto Company has 12,400 units of its sole product in inventory that it produced last year at a cost of $23 each. This year’s model is superior to last year’s, and the 12,400 units cannot be sold at last year’s regular selling price of $51 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $13 each, or (2) they can be reworked at a cost of $254,100 and then sold for $33 each. Prepare an analysis to determine whether Varto should sell the products as is or rework them and then sell them. INCREMENTAL REVENUE AND COST OF ADDITIONAL PROCESSING Revenue if processed further Revenue if sold as isIncremental revenue Add: Incremental cost of processingIncremental net income(Loss) The company should:
Oriole Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $498,000, variable expenses of $365,000, and fixed expenses of $150,000. Therefore, the gloves and mittens line had a net loss of $17,000. If Oriole eliminates the line, $32,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number (e.g., -45) or parentheses (e.g., (45)).) Continue 498000 eTextbook and Media 365000 i 133000 -144000 -11,000 $ ŁA Eliminate i -43000 -43,000 LA $ HA The analysis indicates that Oriole should not eliminate the gloves and mittens line. Increase (Decrease) -498,000 365,000 -133,000 101,000 -32,000
Wildhorse Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $505,000, variable expenses of $363,000, and fixed expenses of $147,000. Therefore, the gloves and mittens line had a net loss of $5,000. If Wildhorse eliminates the line, $39,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income

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