12. Ahmad Company has no beginning and ending inventories, and reports the following data about its only product:

Direct materials used $300,000 Direct labor $75,000 Fixed indirect manufacturing $250,000 Fixed selling and administrative $140,000 Variable indirect manufacturing $125,000 Variable selling and administrative $150,000 Selling price(per unit) $200

Units produced and sold 10,000

Ahmad Company uses the contribution approach to prepare the income statement. What is the contribution margin? A) $750,000 B) $1,000,000 C) $1,350,000 D) $1,625,000

16. Shoestring Company manufactures a part for its production cycle. The costs per unit for 10,000 units of the part are as follows:

Per Unit Direct materials $4.00 Direct labor 6.00 Variable factory overhead 5.00 Fixed factory overhead 4.00 Total costs $19.00

The fixed factory overhead costs are avoidable. Day Company has offered to sell 10,000 units of the same part to Shoestring Company for $18 per unit. Assuming no other use for the facilities, Shoestring Company should ________. A) make the part to save $5,000 B) make the part to save $15,000 C) buy the part from Day Company to save $10,000 ($18 X 10,000 - $19 X 10,000) D) buy the part from Day Company to save $15,000