DEVRY ACCT 505 Week 6 Quiz Segment Reporting

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DEVRY ACCT 505 Week 6 Quiz Segment Reporting and
Relevant Costs for Decisions

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• Question
• (TCO D) Return on investment (ROI) is equal to
  the margin multiplied by
• 2.
• Question
• (TCO D) For which of the following decisions are
  opportunity costs relevant?
• The decision to make or buy a needed part
• The desision to keep or drop a product line

2

• (A)
• Yes
• Yes
• (B)
• Yes
• No
• (C)
• No
• Yes
• (D)
• No
• No
• 3.
• Question
• (TCO D) Last year, the House of Orange had sales
  of 826,650, net operating income of 81,000, and
  operating assets of 84,000 at the beginning of
  the year and 90,000 at

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• the end of the year. What was the company's
  turnover, rounded to the nearest tenth?
• 1.
• Question
• (TCO D) Data for December concerning Dinnocenzo
  Corporation's two major business segments-Fibers
  and Feedstocks-appear below
• Sales revenues, Fibers
• 870,000
• Sales revenues, Feedstocks
• 820,000
• Variable expenses, Fibers
• 426,000
• Variable expenses, Feedstocks
• 344,000
• Traceable fixed expenses, Fibers
• 148,000
• Traceable fixed expenses, Feedstocks

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• Traceable fixed expenses, Feedstocks
• S156,000
• Common fixed expenses totaled 314,000 and were
  allocated as follows 129,000 to the Fibers
  business segment and 185,000 to the Feedstocks
  business segment.RequiredPrepare a segmented
  income statement in the contribution format for
  the company. Omit percentages show only dollar
  amounts.
• 2.
• Question
• (TCO D) Wryski Corporation had net operating
  income of 150,000 and average operating assets
  of 500,000. The company requires a return on
  investment of 19.Required
• i. Calculate the company's current return on
  investment and residual income.ii. The company
  is investigating an investment of 400,000 in a
  project that will the company invest in this
  project?

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• What is the residual income of the project?
  Should the company invest in this project?
• 3.
• Question
• (TCO D) Tjelmeland Corporation is considering
  dropping product S85U. Data from the company's
  accounting system appear below.
• Sales
• 360,000
• Variable Expenses
• 158,000
• Fixed Manufacturing Expenses
• 119,000
• Fixed Selling and Administrative Expenses
• 94,000
• All fixed expenses of the company are fully
  allocated to products in the company's accounting
  system. Further investigation has revealed that
  55,000 of the fixed

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• manufacturing expenses and 71,000 of the fixed
  selling and administrative expenses are avoidable
  if product S85U is discontinued.Required
• i. According to the company's accounting system,
  what is the net operating income earned by
  product S85U? Show your work!ii. What would be
  the effect on the company's overall net operating
  income of dropping product S85U? Should the
  product be dropped? Show your work!
• 4.
• Question
• (TCO D) Fouch Company makes 30,000 units per year
  of a part it uses in the products it
  manufactures. The unit product cost of this part
  is computed as follows.
• Direct Materials
• 15.70
• Direct Labor
• 17.50

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• Variable Manufacturing Overhead
• 4.50
• Fixed Manufacturing Overhead
• 14.60
• Unit Product Cost
• 52.30
• An outside supplier has offered to sell the
  company all of these parts it needs for 51.90 a
  unit. If the company accepts this offer, the
  facilities now being used to make the part could
  be used to make more units of a product that is
  in high demand. The additional contribution
  margin on this other product would be 219,000
  per year.If the part were purchased from the
  outside supplier, all of the direct labor cost of
  the part would be avoided. However, 6.20 of the
  fixed manufacturing overhead