1. TB Problem Qu. 12-187 Mcniff Corporation makes a range ... Mcniff Corporation makes a range of products. The company's predetermined overhead rate is $24 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead $ 75,000 Fixed manufacturing overhead $ 285,000 Direct labor-hours 15,000 Management is considering a special order for 660 units of product O96S at $60 each. The normal selling price of product O96S is $71 and the unit product cost is determined as follows: Direct materials $ 33.00 Direct labor 10.00 Manufacturing overhead applied 24.00 Unit product cost $ 67.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order. Required: The financial advantage (disadvantage) for the company as a result of accepting this special order would be:

2.

Exercise 12-17 Dropping or Retaining a Segment [LO12-2]

Bed & Bath, a retailing company, has two departmentsHardware and Linens. The companys most recent monthly contribution format income statement follows:

				Department
	Total			Hardware			Linens
Sales	$	4,060,000		$	3,050,000		$	1,010,000
Variable expenses		1,322,000			905,000			417,000
Contribution margin		2,738,000			2,145,000			593,000
Fixed expenses		2,310,000			1,470,000			840,000
Net operating income (loss)	$	428,000		$	675,000		$	(247,000	)

A study indicates that $375,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 11% decrease in the sales of the Hardware Department.

Required:

What is the financial advantage (disadvantage) of discontinuing the Linens Department?