11. Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $54.00 Direct labor 35.00 Variable overhead 40.00 Fixed overhead 34.00 Total $163.00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies for $144.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? A) Buy; savings = $89,000 B) Buy; savings = $7,000 C) Make; savings = $1,000 D) Make; savings = $203,000 12. The management accountant for Giada's Book Store has prepared the following income statement for the most current year: Cookbook Travel Book Classics Total Sales $65,000 $164,000 $55,000 $284,000 Cost of goods sold 37,000 67,000 20,000 124,000 Contribution margin 28,000 97,000 35,000 160,000 Order and delivery processing 21,000 25,000 11,000 57,000 Rent (per sq. foot used) 5,000 4,000 4,000 13,000 Allocated corporate costs 10,000 10,000 10,000 30,000 Corporate profit $ (8,000) $58,000 $10,000 $60,000 If the travel book line had been discontinued, corporate profits for the current year would have decreased by ________. A) $97,000 B) $72,000 C) $68,000 D) $58,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2PB: Five Card Draw manufactures and sells 10,000 units of Aces, which retails for $200, and 8,000 units...

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11. Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $54.00 Direct labor 35.00 Variable overhead 40.00 Fixed overhead 34.00 Total $163.00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies for $144.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? A) Buy; savings = $89,000 B) Buy; savings = $7,000 C) Make; savings = $1,000 D) Make; savings = $203,000 12. The management accountant for Giada's Book Store has prepared the following income statement for the most current year: Cookbook Travel Book Classics Total Sales $65,000 $164,000 $55,000 $284,000 Cost of goods sold 37,000 67,000 20,000 124,000 Contribution margin 28,000 97,000 35,000 160,000 Order and delivery processing 21,000 25,000 11,000 57,000 Rent (per sq. foot used) 5,000 4,000 4,000 13,000 Allocated corporate costs 10,000 10,000 10,000 30,000 Corporate profit $ (8,000) $58,000 $10,000 $60,000 If the travel book line had been discontinued, corporate profits for the current year would have decreased by ________. A) $97,000 B) $72,000 C) $68,000 D) $58,000

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