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Question
Seven Seas Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas manufactures the media center in-house, but is considering the possibility of outsourcing that function. At present, the variable cost per unit is $275, and the fixed costs are $39,000 per month. The CEO wishes to boost operational income by $5,000. He has an offer from a foreign producer to provide the media centers at a contract rate of $300 per unit. In order to achieve his objective, how much fixed costs would he have to cut?
A) Cut $4,250 of fixed costs
B) Cut $2,000 of fixed costs
C) Cut $7,500 of fixed costs
D) Cut $19,500 of fixed costs
Answer
This answer is hidden. It contains 150 characters.
Related questions
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Aug
Sep Cash collections
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$40,000
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18,000 Operating expenses
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9,000
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0
19,000
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Jun Cash collections
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Q:
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B) classified form balance sheet.
C) account form balance sheet.
D) audited form balance sheet.
Q:
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Q:
The accounting process of copying a transaction from the journal to the ledger is called:
A) journalizing.
B) posting.
C) proofing.
D) footing.
Q:
A) chart of accounts.
B) ledger.
C) trial balance.
D) journal.
Answer: B
Q:
Which of the following statements about revenue is CORRECT?
A) Revenues decrease owner's equity, so a revenue account's normal balance is a credit balance.
B) Revenues decrease owner's equity, so a revenue account's normal balance is a debit balance.
C) Revenues increase owner's equity, so a revenue account's normal balance is a debit balance.
D) Revenues increase owner's equity, so a revenue account's normal balance is a credit balance.
Q:
The balance of an account is the:
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B) account number, as shown in the chart of accounts.
C) sum of the debits only.
D) sum of the credits only.
Q:
Journalizing a transaction means:
A) calculating the balance in an account.
B) finding the account number in the chart of accounts.
C) recording the transaction, including a brief explanation.
D) copying the information from the journal to the ledger.
Q:
In the accounting system, the first place that transactions are recorded is the ledger.
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For liabilities and revenues, a debit increases the account.
Q:
Zennick Fashion Products uses standard costs for their manufacturing division. Standards specify 3.0 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data:
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Estimated variable overhead costs: $120,000
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At the end of the year, actual data were as follows:
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Actual variable overhead costs: $174,300
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A) $6,300 Favorable
B) $6,300 Unfavorable
C) $12,000 Favorable
D) $12,000 Unfavorable