Answer within 25 min 3 multiple choice questions
6. The management of Kabanuck Corporation is considering dropping product V41B. Data from the company’s accounting system appear below:
Sales$921,000
Variable expenses$404,500
Fixed manufacturing expenses$516,500
Fixed selling and administrative expenses$335,000
All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further investigation has revealed that $206,500 of the fixed manufacturing expenses and $117,500 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued.
What would be the effect on the company’s overall net operating income if product V41B were dropped?
Overall net operating income would decrease by $192,500.
Overall net operating income would decrease by $60,500.
Overall net operating income would increase by $60,500.
Overall net operating income would increase by $192,500.
11. Degregorio Corporation makes a product that uses a material with the following direct material standards:
Standard quantity2.5kilos per unit
Standard price$5per kilo
The company produced 6,600 units in November using 16,850 kilos of the material. During the month, the company purchased 18,900 kilos of the direct material at a total cost of $90,720. The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for November is:
$1,750 F
$1,656 F
$1,750 U
$1,656 U
10. Degregorio Corporation makes a product that uses a material with the following direct material standards:
Standard quantity3.1kilos per unit
Standard price$5.00per kilo
The company produced 6,000 units in November using 19,010 kilos of the material. During the month, the company purchased 21,120 kilos of the direct material at a total cost of $101,376. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for November is:
$3,520 F
$3,520 U
$4,224 F
$4,224 U
