1.1

Vargas Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.85 direct labor-hours. The direct labor rate is $12.00 per direct labor-hour. The production budget calls for producing 7,900 units in October and 7,700 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 6,750 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

1.2

Trini Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 9,200 direct labor-hours will be required in May. The variable overhead rate is $2.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $111,440 per month, which includes depreciation of $10,010. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

1.3

Frocks and Gowns, Incorporated, has two divisions, Day Wear and Night Wear. The Day Wear Division has an investment base of $760,000 and produces and sells 114,000 units of Collars at a market price of $13.50 per unit. Variable costs for the Collars total $7.00 per unit and fixed charges are $4.70 per unit (based on a capacity of 127,000 units). The Night Wear Division wants to purchase 26,000 units of Collars from the Day Wear Division. However, the Night Wear Division is only willing to pay $9.90 per unit.

What is the minimum transfer pricethat the Day Wear Division would accept for the 26,000 unit order from the Night Wear Division if it wishes to maintain its pre-order contribution margin?