1) The Smart Company has been in business for 10 years and is located in

Toronto, Ontario.

The company manufactures two products, blenders and radios. The company

has estimated its overhead in their inspection department to be $240,000. The

company produces 60,000 blenders and 80,000 radios each year. Blender

production requires 20,000 machine hours, radio production requires 30,000

machine hours. The company completes 120 inspections per year, 40

inspections for blenders and the remainder for radios.

Calculate how much of the inspection overhead should be allocated to blenders

and radios? If there is a difference in the allocated overhead, explain why.

2) The Smart Company has been in business for 10 years and is located in

Toronto, Ontario.

The Smart Company has the following financial data:

Total sales are $500,000

5.000 units were sold

The unit variable cost is $60

The fixed costs are $400,000 for manufacturing and $100,000 for selling

Calculate the Contribution Margin per unit, the break even in units and the break

even in sales, the net income or loss if only 10,000 units are sold. Explain, will

the unit cost for variable and fixed change with the change in the total number of

units manufactured.

3) The Light Company is a company located in Toronto, Ontario. The company

manufactures Light Fixtures.

The unit cost is $6 for direct material, $10 for direct labour, and $4 for other

variable costs. The total fixed costs are $200,000 for the 8,000 units that are

produced. A one time special order from the ABC company to purchase 2,000

light fixtures at $24 each is received. The company has sufficient unused

capacity to fulfill this special order.