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1)
Grace Co. can further process Product B to produce Product C. Product B is currently selling for $60 per pound and costs $38 per pound to produce. Product C would sell for $95 per pound and would require arn additional cost of $13 per pound to produce. What is the differential revenue of producing and selling Product C? Oa. $60 per pound Ob. $38 per pound Oc. $35 per pound Od. $95 per pound
2)
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour What is the contribution margin per machine hour for Tales? Oa. $4 Oc. $28 Od. $35
3)
What pricing concept considers the price that other providers charge for the same product? Oa, demand-based concept Ob. competition-based concept Oc. cost-plus concept Od. total cost concept
4)
Keating Co. is considering disposing of equipment with a cost of $58,000 and accumulated depreciation of $40,600, Keating Co. can sell the equipment through a broker for $27,000 less 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $50,000. Keating will incur repair, insurance, and property tax expenses estimated at $11,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is O$16,992 O$9,912 O$21,240 O$14,160
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Answer #1

Answer:-

Question .1 = Option (C) $35

Dffrential Revenue= selling price with further process ung - selling price after further proccesing

= $95-$65

= $35

Question.2 = Option (A) $4

Contribution margin per Machine hrs for tales

= (Selling price - vatale post )/ No of machine hrs

= ( $78 - $50 )/ 7 hrs

= $4 per machine hour

Question.3 = Option (B) Competition based pricing

Question.4 = Option (D) $14160

Written Down value of equipment = $50000-$40600= $9400

Net Income under Leasing Option

=$27000-8%*$27000-$9400 = $15440

Net Income under lease option

=$50000-$11000-$9400 = $29600

Hence Differential net income under lease option will be

= $29600-$15440= $14160

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