Question

Which of the following is not a criterion of relevant information?

a-Differences among alternatives will occur in the future.

b-It differs between the alternatives and differences among alternatives will occur in the future.

c-Differences among the alternatives must have occurred in the past and must occur in the future.

d-It differs between the alternatives.

Bramble Manufacturing has an annual capacity of 80,300 units per year. Currently, the company is making and selling 78,500 units a year. The normal sales price is $108 per unit, variable costs are $65per unit, and total fixed expenses are $2,000,000. An out-of-state distributor has offered to buy 5,600 units at $75 per unit. Bramble's cost structure should not change as a result of this special order.
By how much will Bramble's income change if the company accepts this order?

Bramble’ net income will decrease/increase by $___________ if it accepts the special order.

If the unit cost of direct materials is $20, direct labor is $12, variable overhead is $2, avoidable fixed costs are $6,000, unavoidable fixed costs are $5,000 and sunk costs are $9,000, what is the total relevant cost for 300 products?

a-$24,200

b-$16,200

c-$25,200

d-$15,200

The contribution margin of a particular segment less any direct fixed costs is called

a-segment margin.

b-segment profit.

c-segment operating margin.

d-none of these answer choices are correct.

Answer 1

Which of the following is not a criterion of relevant information?

Option C is correct i.e -Differences among the alternatives must have occurred in the past and must occur in the future.

Bramble manufacturing
Excess capacity available = 80300 - 78500 = 1800 units
Loss in contribution margin ( 5600 - 1800 ) * ( 108 - 65 )	-163400
Increase in net income ( 5600 * [ 75 - 65 ] )	56000
Net income decreases by	-107400
Answer 3
DM	20
DL	12
VOH	2
Avoidable FC ( 6000 / 300 )	20
Total Relevant costs	54
Answer 4
Option A - segment margin