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Mercier's Is Analyzing a Proposed 3-Year Project Using Standard Sensitivity

question 60

Multiple Choice

Mercier's is analyzing a proposed 3-year project using standard sensitivity analysis.The company expects to sell 12,000 units,±4 percent.The expected variable cost per unit is $7 and the expected fixed costs are $36,000.The fixed and variable cost estimates are considered accurate within a ±6 percent range.The sales price is estimated at $14 a unit,±5 percent.The project requires an initial investment of $90,000 for equipment that will be depreciated using the straight-line method to zero over the project's life.The equipment can be sold for $39,000 at the end of the project.The project requires $11,200 in net working capital for the three years.The discount rate is 11 percent and tax rate is 34 percent
What is the contribution margin for a sensitivity analysis using a variable cost per unit of $8?

Recognize the journal entries related to the purchase and use of raw materials, labor, and the allocation of factory overhead in a process cost accounting system.

Analyze the distinction between direct labor and indirect labor (factory overhead) within the context of process cost accounting.

Understand the calculation and application of equivalent units of production in determining cost per unit in a process cost environment.

Distinguish between the treatment of costs in different production departments and the flow of costs through the production process.

Definitions:

Job Enrichment

Change in job duties to increase employees’ authority in planning their work, deciding how it should be done, and learning new skills.

Job Sharing

An employment arrangement where two or more individuals share the responsibilities and duties of a single full-time job.

Job Management

The process of overseeing, scheduling, and controlling the tasks and responsibilities within an organization to ensure that they are completed as required.

Maslow's Need Hierarchy

A psychological theory proposing that humans are motivated by five basic categories of needs: physiological, safety, love/belonging, esteem, and self-actualization, in ascending order of importance.