Exercise 6-13 –Still wrong marked in blue

Exercise6-13 –Still wrong marked in blue

Exercise6-13 Break-Even Analysis:Multiproduct Environment

DonaldTweedt started a company to produce and distribute naturalfertilizers. Donald`s company sells two fertilizers that are wildlypopular: green fertilizer and compost fertilizer.

Greenfertilizer, the most popular among environmentally-minded consumers,commands the highest price and sells for $16 per 30-pound bag. Greenfertilizer also requires additional processing and includesenvironmentally-friendly ingredients that increase its variable coststo $10 per bag. Compost fertilizer sells for $12 and has easilyacquired ingredients that require no special processing. It hasvariable costs of $8 per bag. Tweedt`s total fixed costs are $35,000.After some aggressive marketing efforts, Tweedt has been able todrive consumer demand to be equal for each fertilizer.


Calculatethe number of bags of green fertilizer that will be sold atbreak-even.bags

Exercise7-10 ***still marked incorrect,marked in blueMake or Buy: Effect on Income

Engstrom,Inc., uses 10,000 pounds of a specific component in the production oflife preservers each year. Presently, the component is purchased froman outside supplier for $11 per pound. For some time now, the factoryhas had idle capacity that could be utilized to make the component.Engstrom`s costs associated with manufacturing the component are asfollows:

Inaddition, if the component is manufactured by Engstrom, the companywill hire a new factory supervisor at an annual cost of $32,000.


IfEngstrom chooses to make the component instead of buying it from theoutside supplier, what would be the change, if any, in the company`sincome?by$

***** answer is marked incorrect,

Problem7-21—the ones underlined in blue are still wrongSpecial-OrderDecision: Qualitative Factors

LindseySmith, Inc., has the following cost structure for the upcomingyear:


Ifan amount is zero, enter &quot0&quot.

A.&nbspWhatis the expected level of profit?$

B.&nbspShouldthe company accept a special order for 1,000 units at a selling priceof $20 if variable marketing expenses associated with the specialorder are $2 per unit?

Whatwill be the incremental profit if the order is accepted?$

C.&nbspSupposethat the company received a special order for 3,000 units at aselling price of $19 with no variable marketing expenses. What wouldbe the impact on profit?of$

D.&nbspAssumethat if the special order were accepted, all the regular customerswould be aware of the price paid for the special order. Would thatinfluence your decision?

Problem7-27 *****Bis still marked incorrect

DecisionFocus: Eliminating Unprofitable Segments

CasagrandeCompany is currently operating at 80 percent capacity. Worried aboutthe company`s performance, Mike, the general manager, reviewed thecompany`s operating performance. Following are sales and related costinformation about Casagrande, in millions of dollars:


A.&nbspWhat is the currentoperating profit for the company as a whole?$million

B.&nbspAssume that all fixedcosts are unavoidable. If Mike eliminated the unprofitable segments,what would be the new operating profit for the company as awhole?$million