5 Championship Corporation's three divisions had the following operating data during 20X1. Pippen Total assets Variable costs Revenue Controllable fixed costs Jordan $450,000 90,000 200,000 40,000 $320,000 135,000 250,000 60,000 Rodman $220,000 50,000 170,000 50,000 Compute residual income for JORDAN. The required minimum rate of return is 16%. Positive $3,800 Negative $2,000 Positive $2,800 Negative $4,800 6 Tarazz Company manufactures computers. The following cost information for the manufacture of one computer has been compiled. Direct materials $48 Direct labor 64 Variable manufacturing overhead 48 Fixed manufacturing overhead 32 Total cost per unit $192 The $32 amount reflects the amount of indirect cost allocated to each unit. However, as indicated, the total of these indirect costs is fixed. Tarazz has received a special order for 500 computers at a price of $175 per unit. By how much will overall company net income change if the order is accepted. Company net income will INCREASE by $8,500 if the order is accepted. Company net income will DECREASE by $7,500 if the order is accepted. Company net income will DECREASE by $8,500 if the order is accepted. Company net income will INCREASE by $7,500 if the order is accepted.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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5
Championship Corporation's three divisions had the following operating data during 20X1.
Pippen
Total assets
Variable costs
Revenue
Controllable fixed costs
Jordan
$450,000
90,000
200,000
40,000
Variable manufacturing overhead
*Fixed manufacturing overhead
Total cost per unit
$320,000
135,000
250,000
60,000
Rodman
$220,000
50,000
170,000
50,000
Compute residual income for JORDAN. The required minimum rate of return is 16%.
Positive $3,800
Negative $2,000
Positive $2,800
Negative $4,800
6 Tarazz Company manufactures computers. The following cost information for the manufacture of one computer has been compiled.
Direct materials
Direct labor
$48
64
48
32
$192
*The $32 amount reflects the amount of indirect cost allocated to each unit. However, as indicated, the total of these indirect costs is fixed.
Tarazz has received a special order for 500 computers at a price of $175 per unit. By how much will overall company net income change if the order is accepted.
Company net income will INCREASE by $8,500 if the order is accepted.
Company net income will DECREASE by $7,500 if the order is accepted.
Company net income will DECREASE by $8,500 if the order is accepted.
Company net income will INCREASE by $7,500 if the order is accepted.

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