Use the Information Below to Answer the Following Questions

question 42

Multiple Choice

Use the information below to answer the following questions.
Unique Tables manufactures coffee tables made of recycled timber. Market research has suggested that there will be strong demand for the tables. Due to this, management is debating whether to lease a new turning machine to meet increased production needs. To assist in their decision-making, the management accountant has supplied the following information:
-Refer to the table above. At the current level of sales, which of the following results are achieved?

• A) without the turning machine profit of $30,000; with the turning machine profit of $22,500
• B) without the turning machine profit of $37,500; with the turning machine profit of $45,000
• C) without the turning machine profit of $45,000; with the turning machine profit of $52,500
• D) none of the above

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Definitions:

Labor Cost

The total expenditure incurred by an employer on behalf of employees, including wages, benefits, and taxes.

Holding Cost

The expenses associated with storing unsold inventory, including warehousing, insurance, depreciation, and opportunity costs.

Lot Size

The quantity of a particular product that is produced or purchased in a single batch.

Setup

The process of preparing or configuring equipment or a work area for a new production run or task, which can involve adjustments and changeovers.