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$43,000 7 Blanrin Inc. currently produces all the components for the products it
makes and sells. The total costs of producing a component, Component Y, for one of its
products are given below. The annual requirement of Component Y is 2,200 units. Direct
materials
$19,800 Direct labor11,000 Variable manufacturing overhead 15,400 Fixed
manufacturing overhead 13,200 An external supplier offers to sell the component to
Blanrin Inc. for $23 per unit. After analysis, it is found that if the company buys the
component instead of producing it, all of its variable costs and $8,200 of its fixed
overhead costs will be eliminated. If Blanrin Inc. decides to buy the component instead of
manufacturing it, how will the decision affect the company? A.
Its net income will
increase by $8,200.
 B. Its net income will increase by $3,800.
 C.
Its net
income will decrease by $3,800. D.
Its net income will increase by $4,400. 8 Rick, a
certified accountant, is asked to conduct an audit of the financial statements of Schenk
Ltd. However, the company refuses to cooperate with Rick and does not provide him
with the necessary information. This makes it impossible for him to carry on with the
audit. In this scenario, which of the following opinions is Rick most likely to express? A.
Adverse opinion
 B.
Disclaimer of opinion
 C. Unqualified opinion D.
Qualified opinion 9 Susan is a financial manager at Rvetz Corporation. She wants to
evaluate the efficiency with which the company is using its resources. For this reason, she
needs to calculate the operating margin from the information given below. Net sales
$3,500,000 Cost of goods sold
1,750,000 Office rent
54,500 Selling
expenses
350,000 Interest expense 50,000 Other operating expenses
88,500
Which of the following will be the result? A. 38.4%
 B. 35.9%
 C. 85.9% D.
64.1% 10 Calculate depreciation from the following information. Accounting
profit break-even point
2,871 units Fixed costs
$4,083,200 Sales price
$42
per unit Total variable costs
$2,600 Number of units
100 A. $706,200
 B.
$510,400
 C.
$812,000 D. $1,483,200 10 Calculate depreciation from the
following information. Accounting profit break-even point 2,871 units Fixed costs
$4,083,200 Sales price
$42 per unit Total variable costs $2,600 Number of units
100 A. $706,200
 B.
$510 ,400
 C.
$812,000 D. $1,483,200 11
Yalken Corporation is considering the purchase of a new machine. The cost of the
machine is $250,000. The cash flows for five years are given below. Year 1 Year 2 Year 3
Year 4 Year 5 Cash flows $84,790
$102,500
$70,580
$64,760
$115,700 The company is in the 35 percent tax bracket. Assuming that the cost of capital
is 12%, calculate the net present value. A.
$314,452
 B.
$64,463
 C.
$(64,452) D. $204,394 12 Which of the following scenarios illustrates a violation
of the Sarbanes-Oxley Act? •
Natalie is assigned to audit a company’s financial
records. She finds it impossible to arrive at a conclusion and issues a disclaimer of