Tabitha Company is considering replacing a machine that is presently used in the production of its product. The following data are available: $\begin{array}{lll}&& \text { Replacement } \\ &\text { Old Machine } & \text { Machine }\\ \text { Origin al cost } & \$ 60,000 & \$ 35,000 \\ \text { Useful lif in years } & 10 & 5 \\ \text { Current age in years } & 5 & 0 \\ \text { Book value } & \$ 25,000 & - \\ \text { Disposal value now } & \$ \$, 000 & - \\ \text { Disposal value in 5 years } & 0 & 0 \\ \text { Annual cash operating costs } & \$ 10,000 & \$ 4,000 \end{array}$ The total relevant costs to consider if the old machine is kept are:

A) $50,000 B) $30,000 C) $52,000 D) $60,000 A) $50,000 B) $30,000 C) $52,000 D) $60,000

Partridge Company provided the following information regarding its one and only product-ice skates. $\begin{array}{ll} \text { Direct materials used } & \$ 200,000 \\ \text { Direct labor } & \$ 0,000 \\ \text { Fixed overhead } & 100,000 \\ \text { Fixed s elling and administrative costs } & 150,000\\\text { Variable overhead } & 20,000 \\ \text { Variable selling and administrative } & 60,000 \\ \text { Selling unit price } & 75 \\ \text { Units produced and sold } & 10,000 \end{array}$ The difference in manufacturing cost per unit between the absorption approach and contribution approach is:

A) $10 higher if absorption cost is used B) $36 higher if contribution is used C) $10 higher if contribution cost is used D) $36 higher if absorption is used A) $10 higher if absorption cost is used B) $36 higher if contribution is used C) $10 higher if contribution cost is used D) $36 higher if absorption is used

Adios Company provided the following information regarding its one and only product -skateboards. \[\begin{array} { l l } \text { Direct materials used } & \$ 350,000 \\ \text { Direct labor } & 170,000 \\ \text { Fixed overhead } & 80,000 \\ \text { Variable overhead } & 20,000 \\ \text { Variable selling and administrative } & 50,000 \\ \text { Units produced and sold } & 40,000 \end{array}\] The difference in manufacturing cost per unit, if the absorption approach is used in place of the contribution approach, is:

A) cost per unit decreases by $0.75 B) cost per unit increases by $2 C) cost per unit decreases by $2 D) cost per unit increases by $0.75 A) cost per unit decreases by $0.75 B) cost per unit increases by $2 C) cost per unit decreases by $2 D) cost per unit increases by $0.75

Major Nelson Company is considering replacing a machine that is presently used in the production of its product. The following data are available: $\begin{array}{lll}&& \text { Replacement } \\ &\text { Old Machine } & \text { Machine }\\ \text { Original cost } & \$ 57,000 & \$ 35,000 \\ \text { Useful life in years } & 17 & 5 \\ \text { Current age in years } & 12 & 0 \\ \text { Book value } & \$ 39,000 & - \\ \text { Disposal value now } & \$ 8,000 & - \\ \text { Disposal value in 5 years } & 0 & 0 \\ \text { Annual cash operating } & \$ 7,000 & \$ 4,000\\\text {costs} \end{array}$ The difference in cost between keeping the old machine and replacing the old machine, ignoring income taxes, is:

A) $22,000 in favor of replacing the old machine B) $12,000 in favor of keeping the old machine C) $22,000 in favor of keeping the old machine D) $37,000 in favor of replacing the old machine A) $22,000 in favor of replacing the old machine B) $12,000 in favor of keeping the old machine C) $22,000 in favor of keeping the old machine D) $37,000 in favor of replacing the old machine

Bueno Company provided the following information regarding its one and only product-ice skates. $\begin{array}{ll} \text { Direct materials used } & \$ 200,000 \\ \text { Direct labor } & 80,000 \\ \text { Fixed overhead } & 100,000 \\ \text { Fixed s elling and administrative costs } & 150,000 \\ \text { Variable overhe ad } & 20,000 \\ \text { Variable selling and administrative } & 60,000 \\ \text { Selling unit price } & 75 \\ \text { Units produced and sold } & 10,000 \end{array}$ is the manufacturing cost per unit if the absorption approach is used.

A) $28 B) $40 C) $36 D) $30 A) $28 B) $40 C) $36 D) $30

Cancun Corporation has a joint process which produces three products: X, Y, and Z. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $100,000. Other relevant data are as follows: $\begin{array}{llll} &&\text { Separable }\\&&\text { Processing }\\ \text { Product } & \begin{array}{l} \text { Sales Value at } \\ \text { Split-off } \end{array} & \begin{array}{l} \text { Costs after } \\ \text { Split-off } \end{array} & \begin{array}{l} \text { Sales Value at } \\ \text { Completion } \end{array}\\ \mathrm{X} & \$ 128,000 & \$ 16,000 & \$ 160,000 \\ \mathrm{Y} & 75,000 & 26,000 & 99,000 \\ \mathrm{Z} & 32,600 & 20,000 & 50,000 \end{array}$ Once product X is produced, processing it further will cause profits to:

A) decrease by $16,000 B) increase by $16,000 C) decrease by $32,000 D) increase by $32,000 A) decrease by $16,000 B) increase by $16,000 C) decrease by $32,000 D) increase by $32,000