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purchases be recorded at variable cost as a transfer price. Ajax
Division’s estimated sales and standard cost data for the year ending
December 31, 2012, based on the full capacity of 100,000 units, are as
follows:
• Question 14 Light Company has 2,000 obsolete light fixtures that
are carried in inventory at a manufacturing cost of $30,000. If the
fixtures are reworked for $10,000, they could be sold for $18,000.
Alternately, the light fixtures could be sold for $3,000 to a jobber
located in a distant city. In a decision model analyzing these
alternatives, the opportunity cost would be
• Question 15 Multiple regression differs from simple regression in
that it
• Question 16 Gata Co. plans to discontinue a department with
$48,000 contribution to overhead, and allocated overhead of $96,000,
of which $42,000 cannot be eliminated. What would be the effect of
this discontinuance on Gata’s pretax profit?
• Question 17 A professional organization is planning to conduct a
series of one-day continuing education programs in various cities. The
projected costs related to these programs are
• Question 18 Rodder, Inc. manufactures a component in a router
assembly. The selling price and unit cost data for the component are
as follows:
• Question 19 Lincoln Company, a glove manufacturer, has enough
idle capacity available to accept a special order of 20,000 pairs of
gloves at $12.00 a pair. The normal selling price is $20.00 a pair.
Variable manufacturing costs are $9.00 a pair, and fixed
manufacturing costs are $3.00 a pair. Lincoln will not incur any
selling expenses as a result of the special order. What would be the
effect on operating income if the special order could be accepted
without affecting normal sales?
• Question 20 JacKue Co. plans to produce 200,000 pairs of roller
skates during January of next year. Planned production for February
is 250,000 pairs. Sales are forecasted at 180,000 pairs for January and
240,000 pairs for February. Each pair of roller skates has eight
wheels. JacKue’s policy is to maintain 10% of the next month’s