Information about three joint products follows: $\begin{array}{lccc} &\underline{X}&\underline{Y} &\underline{Z}\\ \text { Anticipated production } & 12,000 \mathrm{~kg} & 8,000 \mathrm{~kg} & 7,000 \mathrm{~kg} \\ \text { Selling price/kg at split-off } & \$ 16 & \$ 26 & \$ 48\\ \begin{array}{l} \text { Additional processing costs/ kg } \\ \text { after split-off (all variable) } \end{array} &\$8&\$20&\$20\\ \begin{array}{l} \text { Selling price/ kg after further } \\ \text { processing } \end{array} & \$ 20 & \$ 40 & \$ 70 \\ \end{array}$ The cost of the joint process is $140,000.Which of the joint products should be processed further?

A) X B) Y C) Z D) both X and Y A) X B) Y C) Z D) both X and Y C

Vest Industries manufactures 40,000 components per year.The manufacturing cost of the components was determined as follows: $\begin{array}{lr} \text { Direct materials } & \$ 75,000 \\ \text { Direct labour } & 120,000 \\ \text { Variable manufacturing overhead } & 45,000 \\ \text { Fixed manufacturing overhead } & 60,000 \\ \text { Total } & \$ 300,000 \end{array}$ An outside supplier has offered to sell the component for $12.75. - What is the effect on income if Vest Industries purchases the component from the outside supplier?

A) $30,000 decrease B) $30,000 increase C) $270,000 decrease D) $270,000 increase A) $30,000 decrease B) $30,000 increase C) $270,000 decrease D) $270,000 increase C

Foster Industries manufactures 20,000 components per year.The manufacturing cost of the components was determined as follows: $\begin{array}{lr} \text { Direct materials } & \$ 150,000 \\ \text { Direct labour } & 240,000 \\ \text { Variable manufacturing overhead } & 90,000 \\ \text { Fixed manufacturing overhead } & 120,000 \\ \text { Total } & \$ 600,000 \end{array}$ An outside supplier has offered to sell the component for $25.50. What is the effect on income if Foster Industries purchases the component from the outside supplier?

A) $30,000 decrease B) $30,000 increase C) $90,000 decrease D) $90,000 increase A) $30,000 decrease B) $30,000 increase C) $90,000 decrease D) $90,000 increase A

Abbott Company is considering purchasing a new machine to replace a machine purchased one year ago that is not achieving the expected results.The following information is available: $\begin{array}{ll} \text { Expected maintenance costs of new machine } & \$ 12,000 \text { per year } \\ \text { Purchase price of existing machine } & \$ 150,000 \\ \text { Expected cost savings of new machine } & \$ 20,000 \text { per year } \\ \text { Expected maintenance costs of existing machine } & \$ 8,000 \text { per year } \\ \text { Resale value of existing machine } & \$ 35,000 \end{array}$ Which of these items is irrelevant?

A) expected maintenance costs of new machine B) purchase cost of existing machine C) expected maintenance costs of existing machine D) expected resale value of existing machine A) expected maintenance costs of new machine B) purchase cost of existing machine C) expected maintenance costs of existing machine D) expected resale value of existing machine

Walton Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: $\begin{array}{llr} \text {Direct materials } &\$12\\ \text { Direct labour } &36\\ \text { Variable manufacturing overhead} &18\\ \text { Fixed manufacturing overhead } &24\\ \end{array}$ The company has the capacity to produce 90,000 units.The product regularly sells for $120. -Refer to the figure.If a wholesaler offered to buy 4,500 units for $100 each,what would be the effect of the special order on income?

A) $45,000 increase B) $90,000 decrease C) $153,000 increase D) $450,000 increase A) $45,000 increase B) $90,000 decrease C) $153,000 increase D) $450,000 increase