If an unprofitable segment is eliminated it is impossible for net income to decrease. fixed expenses of the eliminated segment will all be eliminated. variable expenses of the eliminated segment will be eliminated. it is impossible for net income to increase.
Max Company uses 20,000 units of Part A in producing its products. A supplier offers to make Part A for $\$ 7$. Max Company has relevant costs of $\$ 8$ a unit to manufacture Part $A$. If there is excess capacity, the opportunity cost of not buying Part A from the supplier is $\$ 0$ $\$ 20,000$. $\$ 140,000$. $\$ 160,000$.
Corn Crunchers has three product lines. Its only unprofitable line is Corn Nuts, the results of which appear below for 2019: $\begin{array}{lr}\text { Sales } & \$ 1,400,000 \\ \text { Variable expenses } & 920,000 \\ \text { Fixed expenses } & \underline{600}, \underline{000} \\ \text { Net loss } & \$(\underline{120}, \underline{000})\end{array}$ If this product line is eliminated, $30 \%$ of the fixed expenses can be eliminated. How much are the relevant costs in the decision to eliminate this product line? $\$ 1,520,000$ $\$ 1,340,000$ $\$ 1,100,000$ $\$ 180,000$
Abel Company produces three versions of baseball bats: wood, aluminum, and rubber. A condensed segmented income statement (in thousands) for a recent period follows: Assume none of the fixed expenses for the rubber line are avoidable, in other words, they will continue regardless of the decision made. What will be total net income if the line is dropped? $\$ 125,000$ $\$ 103,000$ $\$ 105,000$ $\$ 140,000$
Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: If the old machine is replaced, it can be sold for $\$ 24,000$. The net advantage (disadvantage) of replacing the old machine is $\$ 18,000$ $\$ 24,000$ $(\$ 6,000)$ $(\$ 60,000)$
A company is deciding whether to replace some old equipment with new equipment. Which of the following is NOT considered in the incremental analysis? Annual operating cost of the new equipment Annual operating cost of the old equipment Cost of the new equipment Book value of the old equipment
Which of the following is NOT a true statement? Incremental analysis is the same as CVP analysis. Incremental analysis might also be referred to as differential analysis. Incremental analysis is useful in making decisions. Incremental analysis focuses on decisions that involve a choice among alternative courses of action.