Banfield Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below: VPYIWXSelling price per unit$248.04$230.66$505.44Variable cost per unit$190.71$172.14$388.80Centiliters of compound W 3.90 3.80 8.10Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. WX, VP, YI VP, WX, YI YI, VP, WX WX, YI, VPGenerally speaking, net operating income under variable and absorption costing will: never be equal. always be equal. be equal only when production and sales are equal. be equal only when production exceeds sales.The three basic elements of manufacturing cost are direct materials, direct labor, and: cost of goods manufactured. work in process. cost of goods sold. manufacturing overhead.Bargain Company's contribution margin ratio is 15%. If the degree of operating leverage is 12 at the $150,000 sales level, operating profit at the $150,000 sales level must equal: $1,500. $2,160. $2,700. $1,875.Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount): Wimpy Mild Medium HotAtomicContribution margin$(2,000) $45,000 $35,000 $50,000 $162,000Segment margin$(16,000) $(5,000) $7,000 $10,000 $94,000Allocated common fixed expenses$10,000 $10,000 $10,000 $10,000 $10,000Segment margin less allocatedcommon fixed expenses$(26,000) $(15,000) $(3,000) $0 $84,000 Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue? Wimpy, Mild, and Medium Wimpy and Mild no flavors should be discontinued WimpySimila Corporation has provided the following data for its most recent year of operation: Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials$11Direct labor$7Variable manufacturing overhead$5Fixed manufacturing overhead per year$308,000Selling and administrative expenses: Variable selling and administrative expense per unit sold$5Fixed selling and administrative expense per year$81,000 Units in beginning inventory0Units produced during the year11,000Units sold during the year9,000Units in ending inventory2,000 Which of the following statements is true? The amount of fixed manufacturing overhead released from inventories is $459,000 The amount of fixed manufacturing overhead deferred in inventories is $56,000 The amount of fixed manufacturing overhead released from inventories is $56,000 The amount of fixed manufacturing overhead deferred in inventories is $459,000The Bharu Violin Corporation has the capacity to manufacture and sell 5,000 violins each year but is currently only manufacturing and selling 4,800. The following data relate to annual operations at 4,800 units: Per ViolinSelling price$600 Manufacturing costs: Variable$130 Fixed$270 Selling and administrative costs: Variable$20 Fixed$40 Woolgar Symphony Orchestra is interested in purchasing Bharu's excess capacity of 200 units but only if they can get the violins for $350 each. This special order would not affect regular sales or the total fixed costs.Assume that Bharu is manufacturing and selling at capacity (5,000 units). Any special order will mean a loss of regular sales. Under these conditions if the special order from Woolgar Symphony Orchestra is accepted, the financial advantage (disadvantage) Bharu for the year should be: ($50,000) ($28,000) ($22,000) $20,000Eastwick produces and sells three products. Last month's results are as follows: P1 P2 P3Revenues$100,000 $200,000 $200,000Variable costs 40,000 140,000 80,000Fixed costs total $200,000. What is Eastwick's margin of safety? (Assume the current product mix.) $115,385. $40,000. $83,333. $460,000.Neef Corporation has provided the following data for its two most recent years of operation: Selling price per unit$84Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials$12Direct labor$5Variable manufacturing overhead$4Fixed manufacturing overhead per year$432,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold$5Fixed selling and administrative expense per year$61,000 Year 1 Year 2Units in beginning inventory0 3,000Units produced12,000 9,000Units sold9,000 10,000Units in ending inventory3,000 2,0000 The net operating income (loss) under absorption costing in Year 1 is closest to: $243,000 $137,000 $29,000 $198,000

Contribution margin states the total revenue amount which is available after the variable costs for…

Answered: Banfield Corporation makes three…

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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Banfield Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below:

	VP	YI	WX
Selling price per unit	$	248.04	$	230.66	$	505.44
Variable cost per unit	$	190.71	$	172.14	$	388.80
Centiliters of compound W		3.90		3.80		8.10

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized.

		WX, VP, YI
		VP, WX, YI
		YI, VP, WX
		WX, YI, VP

Generally speaking, net operating income under variable and absorption costing will:

		never be equal.
		always be equal.
		be equal only when production and sales are equal.
		be equal only when production exceeds sales.

The three basic elements of manufacturing cost are direct materials, direct labor, and:

		cost of goods manufactured.
		work in process.
		cost of goods sold.
		manufacturing overhead.

Bargain Company's contribution margin ratio is 15%. If the degree of operating leverage is 12 at the $150,000 sales level, operating profit at the $150,000 sales level must equal:

		$1,500.
		$2,160.
		$2,700.
		$1,875.

Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount):

	Wimpy		Mild	Medium		Hot	Atomic
Contribution margin	$	(2,000	)	$	45,000			$	35,000		$	50,000	$	162,000
Segment margin	$	(16,000	)	$	(5,000	)		$	7,000		$	10,000	$	94,000
Allocated common fixed expenses	$	10,000		$	10,000			$	10,000		$	10,000	$	10,000
Segment margin less allocated common fixed expenses	$	(26,000	)	$	(15,000	)		$	(3,000	)	$	0	$	84,000

Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue?

		Wimpy, Mild, and Medium
		Wimpy and Mild
		no flavors should be discontinued
		Wimpy

Simila Corporation has provided the following data for its most recent year of operation:


Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials	$	11
Direct labor	$	7
Variable manufacturing overhead	$	5
Fixed manufacturing overhead per year	$	308,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold	$	5
Fixed selling and administrative expense per year	$	81,000


Units in beginning inventory	0
Units produced during the year	11,000
Units sold during the year	9,000
Units in ending inventory	2,000

Which of the following statements is true?

		The amount of fixed manufacturing overhead released from inventories is $459,000
		The amount of fixed manufacturing overhead deferred in inventories is $56,000
		The amount of fixed manufacturing overhead released from inventories is $56,000
		The amount of fixed manufacturing overhead deferred in inventories is $459,000

The Bharu Violin Corporation has the capacity to manufacture and sell 5,000 violins each year but is currently only manufacturing and selling 4,800. The following data relate to annual operations at 4,800 units:

	Per Violin
Selling price	$	600
Manufacturing costs:
Variable	$	130
Fixed	$	270
Selling and administrative costs:
Variable	$	20
Fixed	$	40

Woolgar Symphony Orchestra is interested in purchasing Bharu's excess capacity of 200 units but only if they can get the violins for $350 each. This special order would not affect regular sales or the total fixed costs.

Assume that Bharu is manufacturing and selling at capacity (5,000 units). Any special order will mean a loss of regular sales. Under these conditions if the special order from Woolgar Symphony Orchestra is accepted, the financial advantage (disadvantage) Bharu for the year should be:

		($50,000)
		($28,000)
		($22,000)
		$20,000

Eastwick produces and sells three products. Last month's results are as follows:

	P1		P2		P3
Revenues	$	100,000		$	200,000	$	200,000
Variable costs		40,000			140,000		80,000

Fixed costs total $200,000. What is Eastwick's margin of safety? (Assume the current product mix.)

		$115,385.
		$40,000.
		$83,333.
		$460,000.

Neef Corporation has provided the following data for its two most recent years of operation:


Selling price per unit	$	84
Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials	$	12
Direct labor	$	5
Variable manufacturing overhead	$	4
Fixed manufacturing overhead per year	$	432,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold	$	5
Fixed selling and administrative expense per year	$	61,000

	Year 1	Year 2
Units in beginning inventory	0	3,000
Units produced	12,000	9,000
Units sold	9,000	10,000
Units in ending inventory	3,000	2,0000

The net operating income (loss) under absorption costing in Year 1 is closest to:

		$243,000
		$137,000
		$29,000
		$198,000

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