26.

Assume a company is considering whether to accept or reject a special order opportunity to sell a customer 300 units of a slightly customized version of one of its products for $38.25. The normal selling price of this product is $48 per unit. It can fulfill the order using existing manufacturing capacity. The companys accounting system estimates the following unit product cost for this product:

	Per Unit
Direct materials		$	18
Direct labor			12
Manufacturing overhead			10
Total cost		$	40

The company estimates that $3 of its manufacturing overhead varies with respect to the number of units produced. The remainder of its overhead is fixed and unaffected by the volume of units produced within the relevant range. Assuming that this decision will have no effect on sales to other customers, what is the financial advantage (disadvantage) of accepting the special order?

Multiple Choice

• $1,575

• $1,500

• $600

• $1,200

28.Assume that the cost formula for one of a companys variable expenses is $5.30 per unit. The companys planned level of activity was 2,000 units and its actual level of activity was 2,190 units. The actual amount of this expense was $10,800. The activity variance for this expense is:

Multiple Choice

• $1,007 U.

• $207 U.

• $207 F.

• $807 U.

29.

Assume that the cost formula for one of a companys variable expenses is $5.30 per unit. The companys planned level of activity was 2,000 units and its actual level of activity was 2,190 units. The actual amount of this expense was $10,800. The activity variance for this expense is:

Multiple Choice

• $1,007 U.

• $207 U.

• $207 F.

• $807 U.