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A customer has requested that a corporation fill a special order for 8,000 units of product B2 for $18.50 a unit. While the product would

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A customer has requested that a corporation fill a special order for 8,000 units of product B2 for $18.50 a unit. While the product would be modified slightly for the special order, product B2's normal unit product cost is $14.10. Direct materials $2.90 Direct labor 1.60 Variable manufacturing overhead 6.10 Fixed manufacturing overhead 3.50 Unit product cost $14.10 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product B2 that would increase the variable costs by $5.10 per unit. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: O $63,200 Advantage O ($22.400) Disadvantage O ($63,200) Disadvantage $22,400 Advantage A Company makes 5.000 units of Part A100 each year. This part is used in one of the company's products. The company's Accounting Department reports the following costs of producing the part at this level of activity, Per Direct materials Unit Direct labor $5.80 $7.60 Variable manufacturing overhead $.90 Supervisor's salary $2.10 Depreciation of special equipment $4.10 Allocated general overhead $2.00 An outside supplier has offered to make and sell the part to the company for $20.00 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 fed costs of the entire company. If the outside supplier's offer were accepted, only $1,000 (or $0.20 per unit since there are 5,000 units) of these allocated general overhead costs would be avoided. The annual financial advantage (disadvantage) for the company as a result of buying Part A100 from the outside supplier should be: $15,000 ADVANTAGE $17,000 ADVANTAGE ($15,000) DISADVANTAGE ($17,000) DISADVANTAGE A company has a $500,000 investment opportunity with the following characteristics: Sales Contribution margin ratio Fixed expenses $ 1.200.000 40% $ 300,000 The net operating income margin for this investment opportunity is closest to: O 14.2% O 40% O 36.7% 15%

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