Investing activities are needed to provide the funds to start a business
a. True
b. False
Indicate whether the statement is true or false
False
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The margin of safety ratio is equal to:
a. Net operating income percentage / Contribution margin ratio. b. Contribution margin / Sales. c. Contribution margin / Net operating income. d. Margin of safety / Fixed cost.
Sherman Manufacturing Company currently manufactures a component used in one of its products. The annual production costs for 10,000 components are as follows:
An outside company has offered to supply 10,000 units of the component for $12.50 each. If the company outsources the component, it will be able to rent out the idled factory space for $1,000 per month but will not terminate the product manager.Required:1) Which items are not relevant to this outsourcing decision?2) Identify any opportunity costs associated with this decision.3) Prepare a quantitative analysis that indicates whether the component should be outsourced.
What will be an ideal response?
Because failure to record a liability generally leads to failure to record an expense, it usually results in an overstatement of income
Indicate whether the statement is true or false
If a special pricing order is accepted for 5500 sails at a sales price of $150 per unit, and fixed costs remain unchanged, what is the change in operating income? (Assume the special pricing order will require variable manufacturing costs and variable selling and administrative costs.)
Voyage Sail Makers manufactures sails for sailboats. The company has the capacity to produce 37,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production:
A) Operating income decreases by $825,000.
B) Operating income increases by $825,000.
C) Operating income decreases by $495,000.
D) Operating income increases by $495,000.