2.

Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 48,000 units per month is as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling & administrative expense Fixed selling & administrative expense Per Unit $46.60 $ 8.90 $ 1.90 $18.90 $ 3.40 $16.00 The normal selling price of the product is $102.10 per unit. An order has been received from an overseas customer for 2,800 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $2.00 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $84.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be: Mcfarlain Corporation is presently making part U98 that is used in one of its products. A total of 15,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $2.90 $2.00 $0.80 $2.40 $2.40 $2.60 An outside supplier has offered to produce and sell the part to the company for $10.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition to the facts given above, assume that the space used to produce part U98 could be used to make more of one of the company's other products, generating an additional segment margin of $22,200 per year for that product. What would be the financial advantage (disadvantage) of buying part U98 from the outside supplier and using the freed space to make more of the other product? Two products, Qland VH, emerge from a joint process. Product QI has been allocated $17,300 of the total joint costs of $38,000. A total of 2,400 units of product QI are produced from the joint process. Product QI can be sold at the split-off point for $15 per unit, or it can be processed further for an additional total cost of $10,400 and then sold for $17 per unit. If product QI is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point