Homework SourseQ1 Starling Co is considering disposing of a machine with a
Q1:
Starling Co. is considering disposing of a machine with a book value of $23,900 and estimated remaining life of five years. The old machine can be sold for $5,800. A new high-speed machine can be purchased at a cost of 73,200. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $23,200 to $20,500 if the new machine is purchased. The differential effect on income for the new machine for the entire five years is
increase of $53,900
decrease of $70,070
increase of $70,070
decrease of $53,900
Q2:
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour.
Which product has the highest contribution margin per machine hour?
a.Bales
b.Tales
c.Wales
d.Bales and Tales have the same
Q3:
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour.
What is the contribution margin per machine hour for Bales?
a.$7
b.$5
c.$35
d.$28
Q4:
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour.
What is the contribution margin per machine hour for Tales?
a.$7
b.$35
c.$4
d.$28
Q5:
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour.
What is the contribution per machine hour for Wales?
a.$17
b.$35
c.$28
d.$7
Q6:
Crane Company Division B recorded sales of $71,900, variable cost of goods sold of $50,300, variable selling expenses of $19,500, and fixed costs of $12,600, creating a loss from operations of $10,500.
Determine the differential income or loss from the sales of Division B. Enter a loss as a negative number.
$
Should this Division B be discontinued? (If the answer to above part is negative, select \"Yes\".)
(YES OR NO?)
Solution
Q1,
Ans:
Decrease of Income $53900
Calculation:
Cost of new asset (73200)
Savings in cost 13500
Sale of Old Machine 5800
Total (53900)
Note: Annual cost Saving cost= 23200-20500=2700 per year *5 years=13500/-
Q2.
Ans:c.wales
Particulars Bales Tales Wales
Selling Price 55 78 32
Less: Variable cost (20) ( 50) ( 15)
Contribution Margin 35 28 17
No of required hours per unit 5 7 1
Contribution margin per hour 7 4 17
Ranking 2 3 1
Highest Contribution Margin wales=17 per hour
Based on the question 2,
Q3: the contribution margin per machine hour for Bales?
Ans:7$
Q4: the contribution margin per machine hour for tales?
Ans:$4
Q5: the contribution margin per machine hour for wales?
Ans:$17
Q6:
ANS;
Statement Showing Income or Loss of Division B
Particulars Amount($)
Sales 71900
Less:Variable cost of sales (50300)
Less:Variable selling expense (19500)
Contribution 2100
Less:Fixed cost (12600)
Loss (10500)
The Balance is negative so It is advisable to close the Business of Crane Company Divison B
