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Quizzer For Mas

The document contains 3 practice questions for managerial accounting. The first question asks for the price per unit Spencer Company should charge for a special order of 10,000 units to increase operating income by $10,000. The second question asks for the relevant unit cost to a pricing decision for Gyro Gear Co. to accept an offer to sell 25,000 gears to a foreign manufacturer. The third question asks how operating income would be affected if Boyer Company accepts a special order to produce and sell 50,000 additional basketballs for $7.50 each.

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Ma Teresa B. Cerezo
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57 views3 pages

Quizzer For Mas

The document contains 3 practice questions for managerial accounting. The first question asks for the price per unit Spencer Company should charge for a special order of 10,000 units to increase operating income by $10,000. The second question asks for the relevant unit cost to a pricing decision for Gyro Gear Co. to accept an offer to sell 25,000 gears to a foreign manufacturer. The third question asks how operating income would be affected if Boyer Company accepts a special order to produce and sell 50,000 additional basketballs for $7.50 each.

Uploaded by

Ma Teresa B. Cerezo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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QUIZZER FOR MANAGERIAL ACCOUNTING

 Spencer Company's regular selling price for its product is $10 per
unit. Variable costs are $6 per unit. Fixed costs total $1 per unit
based on 100,000 units, and remain unchanged within the relevant
range of 50,000 units to total capacity of 200,000 units. After sales
of 80,000 units were projected for 2005, a special order was received
for an additional 10,000 units. To increase its operating income by
$10,000, what price per unit should Spencer charge for this special
order?

a. $7 b. $8 c. $10 d. $11 (Source: CPA)

 Gyro Gear Co. produces a special gear used in automatic


transmissions. Each gear sells for $28, and the Company sells
approximately 500,000 gears each year. Unit cost data for 2005 are
presented below:

Direct material $6.00


Direct labor 5.00
Other costs: Variable Fixed
Manufacturing $2.00 $7.00
Distribution 4.00 3.00

Gyro has received an offer from a foreign manufacturer to purchase


25,000 gears. Domestic sales would be unaffected by this
transaction. If the offer is accepted, variable distribution costs will
increase $1.50 per gear for insurance, shipping, and import duties.
The relevant unit cost to a pricing decision on the offer is

a. $17.00. b. $14.50. c. $28.50 d. $18.50

QUIZZER2021jipbv1
QUIZZER FOR MANAGERIAL ACCOUNTING

 The Boyer Case - Revisited


Boyer Company manufactures basketballs. The forecast income
statement for the year before any special orders is as follows:

Amount Per Unit


Sales (400,000 units) $4,000,00 $10.00
0
Manufacturing cost of goods 3,200,000 8.00
sold
Gross profit 800,000 2.00
Selling expenses 300,000 .75
Operating income $ 500,000 $ 1.25

Fixed costs included in the above forecasted income statement are


$1,200,000 in manufacturing cost of goods sold and $100,000 in
selling expenses. The company normally produces 400,000 units per
year, but has the capacity to produce a total of 500,000 units per year.

A company has made a special offer to buy 50,000 basketballs for


$7.50 each. These basketballs will be sold at the retail level outside
the geographical region in which Boyer’s basketballs are normally
sold. If the special offer is accepted, Boyer does not expect there to
be any impact on normal sales. There will be no additional selling
expenses if the special order is accepted. By what amount would
operating income be increased or decreased as a result of accepting
the special order?

a. $25,000 decrease b. $62,500 decrease c. $100,000 increase d. $125,000 increase

QUIZZER2021jipbv1
QUIZZER FOR MANAGERIAL ACCOUNTING

 Relay Corp. manufactures batons. Relay can manufacture 300,000


batons a year at a variable cost of $ 750,000 and a fixed cost of
$450,000. Based on Relay's predictions, 240,000 batons will be sold
at the regular price of $5.00 each. In addition, a special order was
placed for 60,000 batons to be sold at a 40% discount off the regular
price. By what amount would income before income taxes be
increased or decreased as a result of the special order?

a. $60,000 decrease b. $30,000 increase


c. $36,000 increase d. $180,000 increase

QUIZZER2021jipbv1

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