Cost accounting Accounting 344 Chapters 12-13 Student: 1. In a make-or-buy decis
ID: 2588563 • Letter: C
Question
Cost accounting Accounting 344 Chapters 12-13 Student: 1. In a make-or-buy decision, relevant costs include: A. unavoidable fixed costs B. avoidable fixed costs C. fixed factory overhead costs applied to products D. fixed selling and administrative expenses a department that has a contribution margin of $30,000 and 2. Fabio Corporation is $60,000 in fixed costs. Of the fixed costs, $15,000 cannot be avoided. The effect of eliminating this departmer on Fabio's overall net operating income would be: A. a decrease of $30,000. B. an increase of $30,000. C. a decrease of $15,000. D. an increase of $15,000. 3. Lusk Corporat s30 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product x should be would not be avoidable even if the product was discontinued. If Product X is discontinued, the company's overall net operating income would: . decrease by $70,000 per month. increase by $70,000 per month increase by $20,000 per month decrease by $20,000 per month ion produces and sells 20,000 units of Product X each month. The selling price of Product X o·The study shows that $50,000 of the $250,000 in fixed expenses charged to Product XExplanation / Answer
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1 Option B avoidable fixed costs is correct because this is the cost which we can avoid we we take buy or sell decesion 2 Option D an increase of $15,000 in profit on eliminating the department Contribution 30,000 Fixed Cost 45,000 Net loss -15,000 3 Option C an increase of $20,000 in profit on eliminating the Product X Sales 20,000 30 600,000 Variable Cost 20,000 21 420,000 Contribution 20,000 9 180,000 aviodable Fixed Cost 200,000 Loss -20,000 4 Option D $50,000 is correct, on closure of west division company will have to forgo profit of $30,000 East West Sales 720,000 350,000 Variable Cost 370,000 240,000 Tracable Fixed Cost 130,000 80,000 Alllocated Cost 170,000 50,000 30,000