1. The PJ Company manufactures slippers and sells them at $9 a pair. Variable manufacturing cost is $5.25 a pair and allocated fixed manufacturing cost is $2.00 a pair. It has enough idle capacity available to accept a one-time-only special order of 30,000 pairs of slippers at $7.25 a pair. PJ will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales: (a) $0, (b) $60,000 increase. (C) $157,500 increase, or (d) $217,500 increase? Show your calculations. 2. The Albany Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 30,000 units of Part No. 498 is as follows: -X Manufacturing cost per unit Requirement capacity available to accept a one-time-only special order of 30,000 pairs of slippers at $7.25 a pair. PJ will not incur any pase, (c) $157,500 increase, or (d) $217,500 increase? Show your calculations. 11 For Albany to achieve an overall savings of $20,000, the amount of relevant costs that would have to be saved by using the released facilities in the manufacture of Part No. 575 would be which of the following: (a) S150,000, (b) $170,000, (c) $20,000 or (d) $300,000? Show your calculations. What other factors might Albany consider before outsourcing to Bench? Direct materials $ Variable direct manufacturing labour 29 Variable manufacturing overhead 8 15 Fixed manufacturing overhead allocated s 63 Total manufacturing cost per unit The Bench Company has offered to sell 30,000 units of Part No. 498 to Albany for $58 per unit. Albany will make the decision to buy the part from Bench if there is an overall savings of at least $20,000 for Albany. If Albany accepts Bench's offer, 55 per unit of the fixed overhead allocated would be eliminated. Furthermore, Albany has determined that the released facilities could be used to save relevant costs in the manufacture of Part No. 575. Print Done Print Done