Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 26

Multiple Choice

Use the information below to answer the following questions.
Unique Tables manufacture 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. To assist in their decision-making, the management accountant has supplied the following information:
$\begin{array}{lll}&\text { Without }&\text { With }\\&\text { turning machine }&\text { turning machine }\\\text { Expected level of sales } & 1500 \text { units } & 1500 \text { units } \\\text { Sales price per unit } & \$ 150 & \$ 150 \\\text { Variable costs per unit } & \$ 120 & \$ 110 \\\text { Fixed costs } & \$ 7,500 & \$ 15,000\end{array}$
-Refer to the table above. The operating gearing for Unique Tables is:

• A)higher with the turning machine.
• B)higher without the turning machine.
• C)insignificant.
• D)Equal in both cases

Comprehend high-performance work systems and their impact on employee involvement and decision making.

Examine the impact of flexibility in the workplace on employee and employer relationships.

Understand the concept of the psychological contract between employers and employees.

Understand the concept of labor utilization and its adjustment mechanisms.

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Definitions:

Variable Cost

A cost that varies in direct proportion to changes in the level of production or sales volume.

Cost Driver

A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.

Indirect Materials

Small items of material such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily or conveniently traced to it.

Machine Hours

A measure of the total time that production equipment is operational, used to allocate machine-related expenses to products.