1)Mccubbin Corporation is considering two alternatives: A and B. Costs associate
ID: 2444174 • Letter: 1
Question
1)Mccubbin Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below:What is the differential cost of Alternative B over Alternative A, including all of the relevant costs?
a. $161,000 b. $131,500 c. $59,000 d. $102,000
2.
Chrisjohn Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $51 to buy from farmers and $16 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $23 or processed further for $18 to make the end product industrial fiber that is sold for $47. The beet juice can be sold as is for $46 or processed further for $20 to make the end product refined sugar that is sold for $59. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?
a. ($74) b. ($23) c. ($7) d. ($41)
3.
The constraint at Artis Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:
Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized.
a. CT,LN,SI b. SI,CT,LN c. CT,SI,LN d. LN,SI,CT
4.
In deciding whether to manufacture a part or buy it from an outside supplier, which of the following costs are irrelevant?
a. Choice A b. Choice B c. Choice C d. Choice D
5.
Two alternatives, code-named X and Y, are under consideration at Donat Corporation. Costs associated with the alternatives are listed below.
Are the materials costs and processing costs relevant in the choice between alternatives X and Y? (Ignore the equipment rental and occupancy costs in this question.)
a. Both materials costs and processing costs are relevant b. Only materials costs are relevant c. Only processing costs are relevant d. Neither materials costs nor processing costs are relevant
6.
Sheela Dairy Corporation buys unprocessed cows' milk from local farmers. At the dairy, this unprocessed milk is broken down into cream and low-fat milk. The cream can be sold at this point or can be further processed into butter. Which of the following would be relevant in the decision to further process the cream into butter?
a. the amount paid to the farmers to purchase the unprocessed milk. b. the cost of breaking down the unprocessed milk into cream and low-fat milk. c. the portion of corporate fixed expenses that are currently being allocated to cream. d. none of these.
7.
Consider the following statements:
I. A vertically integrated company is more dependent on its suppliers than a company that is not vertically integrated.
II. Many companies feel they can control quality better by making their own parts.
III. A vertically integrated company realizes profits from the parts it is "making" instead of "buying" as well as profits from its regular operations.
Which of the above statements represent advantages to a company that is vertically integrated?
a. Only I b. Only III c. Only I and II d. Only II and III
8.
One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is.
a. TRUE b. FALSE
9.
Oran Refiners, Inc., processes sugar cane that it purchases from farmers. Sugar cane is processed in batches. A batch of sugar cane costs $76 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, cane fiber and cane juice, emerge from the crushing process. The cane fiber can be sold as is for $21 or processed further for $12 to make the end product industrial fiber that is sold for $43. The cane juice can be sold as is for $47 or processed further for $21 to make the end product molasses that is sold for $88.
How much profit (loss) does the company make by processing one batch of sugar cane into the end products industrial fiber and molasses?
a. ($127) b. $30 c. ($26) d. $4
10. (Points: 10)
All other things equal, it is profitable to continue processing a joint product after the split-off point so long as the incremental revenue from further processing exceeds the incremental costs of further processing.
a. TRUE b. FALSE
Explanation / Answer
1.$161000 2.C (7) 3.B 4.B 5.a 6.b 7.iii 8.true 9.C1o. 10.TrueRelated Questions
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