# James & Co., which has excess capacity, received a special order for 4,000 units at a...

###### Question:

James & Co., which has excess capacity, received a special order for 4,000 units at a price of $18 per unit. Currently, production and sales are budgeted for 25,000 units without considering the special order. Budget information for the current year is presented below: Sales$ 900,000
Less: Cost of goods sold   600,000
Gross margin           $300,000 Less: Operating expenses 200,000 Net income$ 100,000

James & Co. estimates that 70% of Cost of goods sold is variable manufacturing costs and 60% of Operating expenses are fixed costs.

11.If the order is accepted, net income will:
a.Increase
b.Decrease
c.Remain the same
e.None of the above

12.Refer to the previous question. By what amount, if any, will net income change? (If net income will not change or more information is needed to answer the previous questions, state your answer as “N/A.”)

XYZ Corporation incurs joint processing costs for Product A and Product B. XYZ can either sell Product A and B at the split-off point or process each further. Information about Product A and B follows.

19.What should XYZ Corp. do with regard to Product A?
a.Process beyond split-off
b.Sell at the split-off

20.What should XYZ Corp do with regard to Product B?
a.Process beyond split-off
b.Sell at the split-off

Use the following information for the next 2 questions. James & Co., which has excess capacity, received a special order for 4,000 units at a price of $18 per unit. Currently, production and sales are budgeted for 25,000 units without considering the special order. Budget information for the current year is presented below: Sales Less: Cost of goods sold Gross margin Less: Operating expenses Net income$ 900,000 600,000 $300,000 200,000$ 100,000 James & Co. estimates that 70% of Cost of goods sold is variable manufacturing costs and 60% of Operating expenses are fixed costs. 11. If the order is accepted, net income will: a. Increase b. Decrease c. Remain the same d. More information is need to answer the question e. None of the above 12. Refer to the previous question. By what amount, if any, will net income change? (If net income will not change or more information is needed to answer the previous questions, state your answer as "N/A.")
Use the following information for the next 2 questions. XYZ Corporation incurs joint processing costs for Product A and Product B. XYZ can either sell Product A and B at the split-off point or process each further. Information about Product A and B follows. Product A Product B 50,000 40,000 $15$18 Units produced Selling price per unit at split-off Selling price per unit after additional processing Separable variable processing costs beyond split-off $22$400,000 $28$300,000 19. What should XYZ Corp. do with regard to Product A? a. Process beyond split-off b. Sell at the split-off 20. What should XYZ Corp do with regard to Product B? a. Process beyond split-off b. Sell at the split-off

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