1. Shaan Co. can manufacture 1,000 units of a component part for direct materials cost, $34,000, and direct labor cost $32,500. Total (fixed and variable) factory overhead cost is $18,000. Estimated variable factory overhead cost is 40% of direct labor cost. Dingemans can purchase the 1,000 units externally from a Moroccan company for $49 per unit plus a 10% import tariff (tax). Fixed costs will not affect the decision. Calculate the decrease or increase in net income if Shaan Co. accepts the Moroccan offer.

2. Standard quantities per unit of product UB40 include an unknown quantity of direct materials and 45 minutes of direct labor. The standard prices and rates are $8 per kilo (kg) for direct materials and $16 per hour for direct labor. The standard factory overhead rate is $8 per direct labor hour. The total standard cost per unit of product UB40 is $284. Calculate the standard amount of direct materials in kg used to manufacture one unit of product UB40

3. PineCO. makes yogurt in 7-ounce containers (units). A standard daily production run of 600,000 units (containers) uses direct materials (DM): Milk at $8.20 per gallon, 200,000 pounds of fruit at $3.00 per pound and packaging that costs $0.03 per unit. The standard DM cost per unit (container) of yogurt is $0.85. Calculate the standard gallons of milk used to produce 500,000 containers of yogurt (round to nearest gallon).

4. The PediCo used 141,000 kilos of copper in actual production, at a total cost of $1,648,000. Original production had been budgeted with a standard direct material quantity of 6.7 kilos per product unit at a standard price of $12 per kilo. Actual production was 33,500 product units.

a) Calculate the direct materials price variance. b) Calculate the direct materials quantity variance.

5. Phul Inc invests in an asset with a two-year useful life and estimated cash inflows: $50,000 in year one, and 60,000 in year two. Cash expenses are expected to be $22,000 per year. McGeorge invests $42,000 in the asset and the desired rate of return for this investment (asset) is 10%. Calculate the present value index of this investment.