Share
Explore BrainMass

Monroe Company Manufacturing Multiple Choice Questions

Please see attached for accounting multiple choice questions.

Attachments

Solution Preview

Study Guide - Week 3
14. Monroe Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $80,000 when 10,000 units were produced and sold, equating to $8 per unit. The company has a one-time opportunity to sell an additional 1,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order?
a. $42,000
b. $5,000
c. $50,000
d. $13,000

Relevant income effect of accepting the special order:
=Additional Units *(Special Sales Price-Unit variable cost)
= 1000*(55-42)
=$13000
Thus option D.

15. Beavers, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $16, while the cost of assembling each unit is estimated at $17. Unassembled units can be sold for $55, while assembled units could be sold for $71 per unit. What decision should Beavers make?
a. Sell before assembly, the company will save $1 per unit.
b. Sell before assembly, the company will save $15 per unit.
c. Process further, the company will save $1 per unit.
d. Process further, the company will save $16 per unit.

As the additional cost of processing is $17 and the additional benefit is 71-55=$16. Thus net loss on Sale after processing is $1.
Hence company will save $1 per unit if it sells before assembly.
a. Sell before assembly, the company will save $1 per unit.

16. Lion Company sells office chairs with a selling price of $25 and a contribution margin per unit of $15. It takes 3 machine hours to produce one chair. How much is the contribution margin per unit of limited resource?
a. ...

Solution Summary

Answers to multiple choice questions concerning Monro Company's manufacturing with brief explanatory questions.

$2.19