Acc Multiple Choice Questions Solutions

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19. Allegiance, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative? A. Sell "as is," $125,000. B. Clean and ship to outlet center, $23,000. C. Clean and ship to outlet center, $103,000. D. Clean and ship to outlet center, $148,000. E. Neither alternative is desirable, as both produce a loss for the firm. Value gained if goods sold the goods “as is” = $45,000 Value gained if goods are cleaned and shipped and then sold =…show more content…
A. The 300-pound remaining inventory of Hydrol. B. The $4.05 market price. C. The $3.40 purchase price. D. 4,500 pounds of Hydrol. E. Two or more of the above factors are relevant. As Victory is undecided among two options, whether to sell Hydol at $4.05 per pound or to accept the special order. The factor relevant is the price of Hydol. If the price gives more profit than accepting the offer, Victory will sell hydol instead of accepting the order. 31. Mueller has been approached about providing a new service to its clients. The company will bill clients $140 per hour; the related hourly variable and fixed operating costs will be $75 and $18, respectively. If all employees are currently working at full capacity on other client matters, the per-hour opportunity cost of being unable to provide this new service is: A. $0. B. $47. C. $65. D. $93. E. $140. Per hour opportunity cost of not being able to provide this service = $140 -$75 =$65 The fixed operating cost is not subtracted because that amount is already invested and thus will be counted towards sunk cost. Note: Fixed component of cost is always invested at the start of project. So, it is same whether you provide service or not. Variable cost occur if you provide service. 32. Snyder, Inc., which has excess capacity, received a special order for 4,000 units at a price of $15 per unit. Currently, production and sales are anticipated to be 10,000 units without considering the special order. Budget information
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