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NEW QUESTION 33
The sales manager for a builder of custom yachts developed the following conditional table for annual production and sales.

According to the table, how many yachts should be built?

  • A. 0
  • B. 1
  • C. 2
  • D. 3

Answer: B

Explanation:
To achieve the maximum expected profit, 30 yachts should be built. For each level of production, multiply the probability of demand by the expected profit. The computation for the maximum is:
0.1 -US $10) + 0.2 $10) + 0.5 $30) + 0.2 $30) = US $22.

 

NEW QUESTION 34
A cost-benefit analysis would show that the manufacturing company would save

  • A. US $81,000 by making the motors internally
  • B. US $54,000 by purchasing the motors from the outside vendor
  • C. US $69,000 by purchasing the motors from the outside vendor
  • D. US $96,000 by making the motors internally

Answer: A

Explanation:
The relevant costs of making the motor are direct materials, direct labor, variable manufacturing overhead, rental costs of the special machinery, and rental costs of the new warehouse. The fixed manufacturing overhead and the costs of the current warehouse space are not relevant because they will be incurred regardless of whether the motor is made or bought. Buying the motor will cost US $630,000 30,000 x $21).
Making the motor will cost US $549,000 {[30,000 x $8 DM +$ 4 DL + $3 VOH)] +$54,000 + $45,000}. Hence, making the motor saves US $81,000 $630,000 – $549,000). A manufacturing company is considering a new product for the coming year, which is an electric motor the company can purchase from a reliable vendor for US $21.00 per unit. The alternative is t. manufacture the motor internally. The company has excess capacity to manufacture the 30,000 motors needed in the coming year except for manufacturing space and special machinery. The machinery can be leased for US $45,000 annually. Finished goods warehouse space adjoining the main manufacturing facility, leased for US $39,000 annually, can be converted and used to manufacture the motors. Additional offsite space can be leased at an annual cost of US $54,000 to replace the finished goods warehouse. The estimated unit costs for manufacturing the motors internally, exclusive the leasing costs itemized above, are:

 

NEW QUESTION 35
Which of the following is a false statement about a database management system application environment?

  • A. Data are used concurrently by multiple users.
  • B. The physical structure of the data is independent of user needs.
  • C. Data are shared by passing files between programs or systems.
  • D. Data definition is independent of any one program.

Answer: C

Explanation:
In this kind of system, applications use the same database There is no need to pass files between applications.

 

NEW QUESTION 36
Listed below are selected line items from the cost-of-quality report for Company B for last month.

What is Company B’s total prevention and appraisal cost for last month?

  • A. US$2,665
  • B. US$1,940
  • C. US$786
  • D. US$1,154

Answer: B

Explanation:
Prevention costs are incurred to prevent defects from occurring. An example is equipment maintenance. Appraisal costs are incurred to detect defective output during and after the production process. An example is product testing. Thus, total prevention and appraisal cost for the month equals US $1,940 (US $1,154 +US $786).

 

NEW QUESTION 37
An entity is currently being sued by a customer. A reliable estimate can be made of the costs that would result from a ruling unfavorable to the entity, and the amount involved is material. The entity’s managers, lawyers, and auditors agree that the likelihood of an unfavorable ruling is remote. This contingent liability:

  • A. Should be disclosed as a parenthetical comment in the balance sheet.
  • B. Should be disclosed in a note.
  • C. Should be disclosed by an appropriation of retained earnings.
  • D. Need not be disclosed.

Answer: D

Explanation:
A contingent liability includes a present obligation for which an outflow of resources embodying economic benefits is not probable. A contingent liability is not recognized but is disclosed unless the possibility of the outflow is remote.

 

NEW QUESTION 38
……

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