41. DJH Company produces 1,000 units of Part X per month.

The total manufacturing costs of the part are as follows:

Direct materials $10,000

Direct labor 15,000
Variable overhead 5,000
Fixed overhead 30,000
-------
Total manufacturing cost $60,000
=======

An outside supplier has offered to supply the part at $40 per unit. It is estimated that 20% of the fixed overhead
assigned to Part X will no longer be incurred if the company purchases the part from the outside supplier. If DJH
Company purchases 1,000 units of Part X from the outside supplier per month, then its monthly operating income will
a. decrease by $20,000.
b. decrease by $4,000.
c. not change.
d. increase by $20,000.

c 42. DJH Company produces 1,000 units of Part X per month. The total manufacturing costs of the part are as follows:

Direct materials $10,000

Direct labor 15,000
Variable overhead 5,000
Fixed overhead 30,000
-------
Total manufacturing cost $60,000
=======

An outside supplier has offered to supply the part at $40 per unit. It is estimated that 20% of the fixed overhead
assigned to Part X will no longer be incurred if the company purchases the part from the outside supplier. What is the
maximum price that DJH Company should be willing to pay the outside supplier?
a. $60
b. $40
c. $36
d. $25

c 43. Scooter Company produces three products from a joint process costing $100,000. The following information is available:

Costs to Selling Price

Selling Price Process After Further
Units at Split-off Further Processing
----- ------------ ------- ----------
A 10,000 $35 $70,000 $40
B 20,000 $40 $30,000 $45
C 30,000 $20 $90,000 $25

Which products should be processed further?

a. A only.
b. A and B.
c. B and C.
d. A, B, and C.

b 44. Genco Company produces three products from a joint process costing $100,000. The following information is available:

Costs to Selling Price

Selling Price Process After Further
Units at Split-off Further Processing
----- ------------ ------- ---------
A 2,000 $25 $60,000 $50
B 3,000 $30 $60,000 $45
C 5,000 $40 $80,000 $60
 Which products should be sold without further processing?
a. B only.
b. A and B.
c. B and C.
d. A, B, and C.

c 45. Colfax Company expects to incur the following costs at the planned production level of 10,000 units:

Direct materials $100,000

Direct labor 120,000
Variable overhead 60,000
Fixed overhead 30,000

The selling price is $50 per unit. The company currently operates at full capacity of 10,000 units. Capacity can be
increased to 13,000 units by operating overtime. Variable costs increase by $14 per unit for overtime production. Fixed
overhead costs remain unchanged when overtime operations occur. Colfax Company has received a special order from
a wholesaler who has offered to buy 1,000 units at $45 each. What is the incremental cost associated with this special
order?
a. $14,000
b. $28,000
c. $42,000
d. $45,000

b 46. Colfax Company expects to incur the following costs at the planned production level of 10,000 units:

Direct materials $100,000

Direct labor 120,000
Variable overhead 60,000
Fixed overhead 30,000

The selling price is $50 per unit. The company currently operates at full capacity of 10,000 units. Capacity can be
increased to 13,000 units by operating overtime. Variable costs increase by $14 per unit for overtime production. Fixed
overhead costs remain unchanged when overtime operations occur. Colfax Company has received a special order from
a wholesaler who has offered to buy 1,000 units at $45 each. What is the impact on Colfax's operating income if this
special order is accepted?
a. $17,000 increase
b. $3,000 increase
c. no change
d. $5,000 decrease

c 47. GMH Company manufactures 100,000 units of Part X annually for use in one of its main products. The total manufacturing
cost for 100,000 units of Part X is as follows:

Direct materials $120,000

Direct labor 80,000
Variable overhead 40,000
Fixed overhead 160,000
-------
Total cost $400,000
========

Selin Company has offered to sell GMH 100,000 units of Part X per year. If GMH accepts this offer, the facilities used
to produce Part X can be used in the production of other components. This change would save GMH $10,000 in rent
for the leased production facility used at present to support the production of other components. What is the amount of
relevant costs for this make-or-buy decision?
a. $200,000
b. $240,000
c. $250,000
d. $400,000

d 48. GMH Company manufactures 100,000 units of Part X annually for use in one of its main products. The total manufacturing
cost for 100,000 units of Part X is as follows:
 Direct materials $120,000
Direct labor 80,000
Variable overhead 40,000
Fixed overhead 160,000
--------
Total cost $400,000
========

Sutton Company has offered to sell GMH 100,000 units of Part X per year. If GMH accepts this offer, the facilities
used to produce Part X can be used in the production of other components. This change would save GMH $10,000 in
rent for the leased production facility used at present to support the production of other components. What is the
maximum price that GMH should be willing to pay Sutton for part X?
a. $1.20
b. $2.00
c. $2.40
d. $2.50

d 49. Barrie, Inc., produces three products: A, B, and C. Two machines are used to produce the products. The contribution
margins, sales demands, and time on each machine (in minutes) is as follows:
time time
Demand CM on M1 on M2
A 100 $12 5 10
B 80 18 10 5
C 100 25 15 5

There are 2,400 minutes available on each machine during the week. How many units should be produced and sold to
maximize the weekly contribution?
A B C
a. 100 80 100
b. 20 80 100
c. 100 40 100
d. 100 80 73

b 50. Barrie, Inc., produces three products: A, B, and C. Two machines are used to produce the products. The contribution
margins, sales demands, and time on each machine (in minutes) is as follows:
time time
Demand CM on M1 on M2
A 100 $12 5 10
B 80 18 10 5
C 150 25 5 10

There are 2,400 minutes available on each machine during the week. How many units should be produced and sold to
maximize the weekly contribution?
A B C
a. 100 80 150
b. 50 80 150
c. 90 0 1