Winter 2020 FINA 415- Final Mock Exam with Accurate
solutions
1. Super Swag Division has the following
information: Sales $600,000
Variable expenses 320,000
Fixed expenses 410,000
If this division is eliminated the fixed expenses will be allocated
to the company's other divisions. What is the incremental effect
on net income if the division is dropped?
A. $130,000 increase
B. $410,000 decrease
C. $280,000 decrease
D. $190,000 increase
E. None of the above
2. Dowdall Corp can make 5,000 toy robots with the following costs:
Direct Materials $74,00
0
Direct Labour 30,000 3. The company can purchase the
Variable Overhead 23,000 5,000 robots externally for $
Fixed Overhead 15,000 145,000. The avoidable fixed
costs are $15,000 if the units
are purchased externally. What is the cost savings if the company
makes the robots?
A. $18,000
B. $15,000
C. $5,000
D. $3,000
E. None of the above
(Use the following for the next 3 questions)
Flat Earth Enterprises sells its product for $40 per unit. FEE
recently received a special order from a customer for 20,000
units. Production costs per unit for regular sales are:
Direct materials $6
Direct labour 14
,Manufacturing overhead (2/3 variable) 12
, 4. Suppose the special-order price is $600,000 for all 20,000
units, and assume that Taylor has sufficient capacity to fill
the special order. Should it be accepted?
A. Yes, because profits will increase by $120,000
B. No, because profits will decrease by $200,000
C. No, because profits will decrease by $40,000
D. Yes, because profits will increase by $40,000
E. None of the above
5. Suppose that FEE would like to earn $50,000 on this order
and assume that there is sufficient capacity to fill the
special order. What price per unit should FEE charge for the
special order?
A. $34.50
B. $42.50
C. $30.50
D. $26.50
E. None of the above
6. Suppose that the special-order price is $600,000 for all
20,000 units, but there is not sufficient capacity to fill the
order; 8,000 units of regular business will be replaced by the
special order if it is accepted. Should FEE accept the special
order? And why?
A. No, because profits will decrease by $56,000
B. Yes, because profits will increase by $40,000
C. No, because profits will decrease by $24,000
D. No, because profits will decrease by $280,000
E. None of the above
7. Finish Company has a production process where two products
result from a joint processing procedure; both can be sold
immediately or processed further. Given the following
additional per unit information, determine which of the
products should be processed further.
Allocated Additional New
Product Joint Cost Selling Price Processing Cost Selling
Price
solutions
1. Super Swag Division has the following
information: Sales $600,000
Variable expenses 320,000
Fixed expenses 410,000
If this division is eliminated the fixed expenses will be allocated
to the company's other divisions. What is the incremental effect
on net income if the division is dropped?
A. $130,000 increase
B. $410,000 decrease
C. $280,000 decrease
D. $190,000 increase
E. None of the above
2. Dowdall Corp can make 5,000 toy robots with the following costs:
Direct Materials $74,00
0
Direct Labour 30,000 3. The company can purchase the
Variable Overhead 23,000 5,000 robots externally for $
Fixed Overhead 15,000 145,000. The avoidable fixed
costs are $15,000 if the units
are purchased externally. What is the cost savings if the company
makes the robots?
A. $18,000
B. $15,000
C. $5,000
D. $3,000
E. None of the above
(Use the following for the next 3 questions)
Flat Earth Enterprises sells its product for $40 per unit. FEE
recently received a special order from a customer for 20,000
units. Production costs per unit for regular sales are:
Direct materials $6
Direct labour 14
,Manufacturing overhead (2/3 variable) 12
, 4. Suppose the special-order price is $600,000 for all 20,000
units, and assume that Taylor has sufficient capacity to fill
the special order. Should it be accepted?
A. Yes, because profits will increase by $120,000
B. No, because profits will decrease by $200,000
C. No, because profits will decrease by $40,000
D. Yes, because profits will increase by $40,000
E. None of the above
5. Suppose that FEE would like to earn $50,000 on this order
and assume that there is sufficient capacity to fill the
special order. What price per unit should FEE charge for the
special order?
A. $34.50
B. $42.50
C. $30.50
D. $26.50
E. None of the above
6. Suppose that the special-order price is $600,000 for all
20,000 units, but there is not sufficient capacity to fill the
order; 8,000 units of regular business will be replaced by the
special order if it is accepted. Should FEE accept the special
order? And why?
A. No, because profits will decrease by $56,000
B. Yes, because profits will increase by $40,000
C. No, because profits will decrease by $24,000
D. No, because profits will decrease by $280,000
E. None of the above
7. Finish Company has a production process where two products
result from a joint processing procedure; both can be sold
immediately or processed further. Given the following
additional per unit information, determine which of the
products should be processed further.
Allocated Additional New
Product Joint Cost Selling Price Processing Cost Selling
Price
