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Perry's Cycle Company manufactures annually 20,000 units of TushSeat, a bicycle seat used on many of the company's products, and also sold directly to retailers for $38 per unit. At the current level of production, the cost per unit to produce TushSeat consists of: direct materials per unit is $9, direct labor per unit is $7,variable overhead is per unit $6,and fixed overhead per unit is $3.It has come to the attention of management that a seat of similar quality can be purchased from outside suppliers.Assume that seats can be purchased from the outside supplier at $25 each, and that 60% of total fixed costs incurred in producing TushSeat will be eliminated by this strategy. Buying the seats instead of manufacturing them would cause Perry's operating income to: ( )

A. Decrease by $20,000.
B. Increase by $36,000.
C. Increase by $16,000.
D. Increase by $24,000.

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Perry's Cycle Company manufactures annually 20,000 units of TushSeat, a bicycle seat used on many of the company's products, and also sold directly to retailers for $38 per unit. At the current level of production, the cost per unit to produce TushSeat consists of: direct materials per unit is $9, direct labor per unit is $7,variable overhead is per unit $6, and fixed overhead per unit is $3.It has come to the attention of management that a seat of similar quality can be purchased from outside suppliers. If opportunity costs are $10000, Buying the seats instead of manufacturing them would cause Perry's operating income to: ( )

A. Decrease by $34,000.
B. Increase by $30,000.
C. Increase by $16,000.
D. Increase by $14,000.

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Management accounting systems are designed to assist organizations in the performance of all of the following functions except: ( )

A. The assignment of decision-making authority over company assets.
B. Planning and decision-making.
C. Monitoring, evaluating and rewarding performance.
D. The preparation of income tax returns.

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In a manufacturing company, the cost of finished goods manufactured is equal to: ( )

A. The beginning inventory of finished goods, plus net purchases, less the ending inventory of finished goods.
B. The sum of the manufacturing costs charged (debited) to the Work in Process Inventory account during the period.
C. The costs of direct materials, direct labor, and manufacturing overhead incurred in manufacturing the goods sold during the period.
D. The beginning inventory of work in process, plus total manufacturing costs for the period, less the ending inventory of work in process.

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The margin of safety is calculated by: ( )

A. Dividing fixed costs plus target income by the contribution margin.
B. Subtracting break-even income from current income.
C. Subtracting break-even sales from current sales.
D. Subtracting fixed costs from current contribution margin.

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A. Decrease by $20,000. B. Increase by $36,000. C. Increase by $16,000. D. Increase by $24,000.

Management accounting systems are designed to assist organizations in the performance of all of the following functions except: ( )

In a manufacturing company, the cost of finished goods manufactured is equal to: ( )

The margin of safety is calculated by: ( )

A. Decrease by $20,000.
B. Increase by $36,000.
C. Increase by $16,000.
D. Increase by $24,000.