|Posted: 23 Jun 2010 at 17:23 | IP Logged
I need the steps to the solution of the below questions, i do not know how AICPA arrived to the answer, can someone please explains:
company that produces 10,000 units has fixed costs of $300,000, variable costs of $50 per unit, and a
sales price of $85 per unit. After learning that its variable costs will increase by 20%, the company is
considering an increase in production to 12,000 units. Which of the following statements is correct
regarding the company's next steps?
a. If production is increased to 12,000 units, profits will increase by $50,000.
b. If production is increased to 12,000 units, profits will increase by $100,000.
c. If production remains at 10,000 units, profits will decrease by $50,000.
d. If production remains at 10,000 units, profits will decrease by $100,000.
Choice "d" is correct but with my calculation C is suppose to be correct
delivery company is implementing a system to compare the costs of purchasing and operating different
vehicles in its fleet. Truck 415 is driven 125,000 miles per year at a variable cost of $0.13 per mile. Truck
415 has a capacity of 28,000 pounds and delivers 250 full loads per year. What amount is the truck's
delivery cost per pound?
a. $0.00163 per pound.
b. $0.00232 per pound.
c. $0.58036 per pound.
d. $1.72000 per pound.
Choice "b" is correct. I am clueless on this one!!!