Wallen Corporation is considering eliminating a department that has an annual contribution margin of $80,000 and $160,000 in annual fixed costs. Of the fixed costs, $90,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be:

Q: Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing…

A: Given information is: Gelb Company currently manufactures 40,000 units per year of a key component…

Q: Scott Incorporated has been in business for several months.  Because of increased competition in the…

A: Break-even analysis is a technique widely used by production management. It helps to determine the…

Q: Forrester Company is considering buying new equipment that would increase monthly fixed costs from…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Wallen Corporation is considering eliminating a department that has an annual contribution magin of…

A: Annual financial advantage(disadvantage) for the company of eliminating this department = Savings of…

Q: What would happen to the company's profit if the changes were implementedand production decreased to…

A: The correct answer is  b. It will decrease

Q: The company's total general company overhead would be unaffected by this decision. Required: 1.…

A: In accounting we have to make decisions like buy or make a particular asset. This includes…

Q: XYZ Company is facing changes in its cost structure so that fixed costs will decrease from $800,000…

A: Net income can be defined as the difference between total revenues and total expenses. Expenses can…

Q: Forrester Company is considering buying new equipment that would increase monthly fixed costs from…

A: For New Equipment: Fixed costs = $150,000 Variable cost = $60 per unit Selling price = $100 per unit…

Q: manufacturing overhead costs. if the special order is accepted, variable selling costs would…

A: Variable cost means the cost which vary with the level of output and fixed cost means the cost which…

Q: Manor Homes plans to discontinue a segment which last year generated a contribution margin of…

A: The fixed cost which is not avoidable is the costs that are incurred even if the segment is…

Q: "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer,"…

A: Financial Advantage/(Disadvantage)=Total relevant cost of making-Cost of purchase

Q: Abraham Company had revenues of $830,000 last year with total variable costs of $647,400 and fixed…

A: Variable Cost Ratio: Variable cost ratio can be calculated by dividing the total amount of variable…

Q: The NUBD Co. is expecting an increase in fixed costs by P78,750 upon moving their place of business…

A: The break even sales are calculated as fixed cost divided by contribution margin ratio.

Q: A bike manufacturing company has fixed costs of $165,000 per annum and the variable costs are 48% of…

A: Calculate contribution margin per unit, if variable costs increased to 56% of sales.Contribution…

Q: A bike manufacturing company has fixed costs of $120,000 per annum and the variable costs are 37% of…

A: Contribution margin = ( 1 - Variable cost ) Break-even point = FIxed cost / Contribution margin…

Q: XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000…

A: Profit of the company can be calculated by deducting total costs that are variable costs and fixed…

Q: The market price for a product has been $50 per unit, but competitive pressures have reduced the…

A: Manufacturing costs: Manufacturing costs are the costs which are involved in converting the raw…

Q: implemented and production decreased to 45,000 units? a- It will stay the same. b -It will increase…

A: The correct answer is :-  b. It will increase

Q: Zeal Corporation is thinking about the dropping of its product Z. Sales of the product total…

A: Calculate the net profit/loss when Product Z is continued: Particulars Amount ($) Sales…

Q: XYZ Company is facing changes in its cost structure so that fixed costs will increase from $400,000…

A: Cost that changes irrespective of production level are called fixed costs whereas costs that changes…

Q: Wexford Industrial Supply is considering a new project with estimated depreciation of $38,200, fixed…

A: Formula: accounting break-even level = (Sale -Fixed cost -Depreciation)/ Variable cost

Q: A producer of chairs is considering the addition of a new plant to absorb the backlog of demand that…

A: Break even point is the point where revenue is equal to variable cost and fixed cost.

Q: The Windshield division of Jaguar Company makes windshields for use in its Assembly division. The…

A: Note: As per general rule, in the case of sufficient capacity available, the minimum transfer price…

Q: Ram Co. is trying to decide whether or not to discontinue one of its products, slow cookers. Last…

A: Variable cost means the cost which vary with the level of output and fixed cost means the cost which…

Q: The president believes it would be a mistake to change the unit selling price. Instead, he wants to…

A: Cost volume profit analysis:- Cost volume profit analysis is defined as the analysis, which shows…

Q: a.  If a transfer price of $148 per unit is established and 50,000 units of materials are…

A: Operations income:- Operations income/Operating income is that income that a business gets after…

Q: Contribution Margin of Walls Corporation, Consumer division is Rs. 1900,000 and the fixed expenses…

A: Contribution means the difference between the selling price and variable cost. Fixed cost remain…

Q: Lusk Corporation produces and sells 15,000 units of Product X each month. The selling price of…

A: Solution: Contribution margin lost if discontinued = CM per unit * units = (40-32)*15000 = 120,000

Q: If the department is discontinued, what would be the annual change in the company's overall net…

A: Any organization can have departments that work as either profit centers and cost centers . It is…

Q: "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer,"…

A: 1. Determination of financial advantage or disadvantage of buying drums from outside supplier for…

Q: Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it…

A: Make or Buy Decision: The process of deciding whether to produce a product or service in-house or to…

Q: A study has been conducted to determine if one of the departments in Your Company should be…

A: Discontinuing a department means that department is no longer operated, it is either shut down…

Q: A study has been conducted to determine if one of the departments in Your Company should be…

A: Calculate net loss from the department (division): Net loss=Contribution-Fixed…

Q: Company XYZ is currently operating with a 60% contribution margin. The company is planning an…

A: Contribution margin= Contribution/ Sales Contribution= Sales-Variable cost

Q: Ortega Interiors provides design services to residential and commercial clients. The residential…

A: Net income / (loss) is the amount of money earned or incurred after deducting the outlays from the…

Q: A responsibility center's contribution margin ratio is 40%, and its common fixed costs are currently…

A: Increase in margin = Increase in contribution margin - Increase in fixed costs where, Increase in…

Q: XYZ Company is considering eliminating a department that has an annual contribution margin of…

A: Contribution  margin is the difference between the revenue and variable cost. And the profit of the…

Q: "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer,"…

A: In make or buy decision we evaluate both costs , making in our own plant and buying from…

Q: The NUBD Co. is expecting an increase in fixed costs by P78,750 upon moving their place of business…

A: At break even sales. Sales - Contribution margin - Fixed costs = 0 or  Sales - Contribution margin =…

Q: The Windshield division of Jaguar Company makes windshields for use in its Assembly division. The…

A: Note: As per general rule, in the case of sufficient capacity available, the minimum transfer price…

Q: Valero Company had sales in 2016 of $1,800,000 on 60,000 units. Variable costs totaled $720,000, and…

A: CVP income statement means a statement where expenses are divided in two parts i.e. fixed cost and…

Q: XYZ company is studying the profitability of a change in operation and has gathered the following…

A: The company should accept the anticipated operations if the new operations give additional benefits…

Q: The Rizal Marketing Company is expecting an increase of fixed costs by P78,750 upon moving their…

A: Break-Even Sales:- It is a point where the company earns no profit no loss, after this point…

Q: The NUBD Co. is expecting an increase in fixed costs by P78,750 upon moving their place of business…

A: Solution Given Present breakeven sales 750000 Necessary sales volume to breakeven 975000…

Q: Phelps Industries is a multi-product company that currently manufactures 30,000 units of part ST35…

A: Differential analysis helps manager to evaluate costs and revenue that can arise from taking up…

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.