41. Under the total cost concept, manufacturing cost plus desired profit is included in the total cost per unit.
42. Under the variable cost concept, only variable costs are included in the cost amount per unit to which the markup is added.
43. The desired selling price for a product will be the same under both variable and total cost.
44. The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed:
A. manufacturing margin
B. contribution margin
C. differential cost
D. differential revenue
45. The amount of increase or decrease in cost that is expected from a particular course of action as compared with an alternative is termed:
A. period cost
B. product cost
C. differential cost
D. discretionary cost
46. A cost that will not be affected by later decisions is termed a(n):
A. historical cost
B. differential cost
C. sunk cost
D. replacement cost
47. The condensed income statement for a business for the past year is presented as follows:
Product
FGHTotal
Sales$300,000$210,000$340,000$850,000
Less variable costs180,000190,000220,000590,000
Contribution margin$120,000$ 20,000$120,000$260,000
Less fixed costs50,00050,00040,000140,000
Income (loss) from oper.$ 70,000$ (30,000)$ 80,000$120,000
Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?
A. $20,000 increase
B. $30,000 increase
C. $20,000 decrease
D. $30,000 decrease
48. The condensed income statement for a business for the past year is as follows:
Product
TU
Sales$660,000$320,000
Less variable costs540,000220,000
Contribution margin$ 120,000$100,000
Less fixed costs145,00040,000
Income (loss) from operations$ (25,000)$ 60,000
Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T?
A. $120,000 increase
B. $250,000 increase
C. $25,000 decrease
D. $120,000 decrease
49. A business is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $12, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?
A. $150,000 cost increase
B. $ 90,000 cost decrease
C. $150,000 cost increase
D. $ 90,000 cost increase
50. A business is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36, including fixed costs, and $28, not including fixed costs. If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?
A. $60,000 cost decrease
B. $180,000 cost increase
C. $60,000 cost increase
D. $180,000 cost decrease