A customer has requested that Lewelling Corporation fill a special order for 2,000 units of product 547 for $40 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $18.30: Direct materials $ 4.40 Direct labor 6.00 Variable manufacturing overhead 1.50 Fixed manufacturing overhead 6.40 Unit product cost $ 18.30 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 macdle to product 547 that would increase the variable costs by $2.10 per unit and that would require an investment of $14,000.00 in special molds that would have no salvage value. 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 incremental operation income for the company as a result of accepting this special order should be: Multiple Choice O $38,000 $14,200 O O ($13,700) O ($1.800) 8 The SP Corporation makes 34,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity Is: Direct materials $ 9.30 Direct labor $ 8.30 ; Variable manufacturing overhead $ 3.35 os) Fixed manufacturing overhead $ 4.30 An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $23.35. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor Is a variable cost in this company. The annual operating income (loss) for the company as a result of making the motors rather than buying them from the outside supplier would be: Multiple Choice O 81,600 ($64.600) $195,500 O O $146,200 O Sardi Incorporated is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 14,200 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials $ 10.00 i Direct labor 7.00 & m-.oa:zs) Variable manufacturing overhead 2.80 Fixed manufacturing overhead 4.80 Unit product cost $ 24.60 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 30% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 1 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 2 minutes on this machine and that has a contribution margin of $6.40 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component? (Round your intermediate calculations to 2 decimal places.) Multiple Choice O $24.44 per unit $24.00 per unit O O $27 .80 per unit O $21.24 per unit Bruce Corporation makes four products in a single facility. These products have the following unit product costs: 1 O Products A B C D Direct materials $ 15.18 5% 11.880 s 11.80 3 11.48 Direct labor 20.20 28.20 34.490 41.28 = Variable manufacturing overhead 5.18 3.50 3.40 4.00 ("'" '""'m) Fixed manufacturing overhead 27.3@ 35.60 27.40 38.00 Unit product cost 67.70 78.30 77.00 94.60 Additional data concerning these products are listed below. Products A B [ D Grinding minutes per unit 4.60 6.10 5.18 4,28 Selling price per unit $ 76,99 S 94.30 4 BB.20 $ 1@5.00 Variable selling cost per unit % 3.00 $ 2.08 $ 4.10 $ 2.40 Monthly demand in units 4,800 4,800 3,800 2,800 The grinding machines are potentially the constraint in the production facility. A total of 81,600 minutes are available per month on these machines. Direct labor is a variable cost in this company. Up to how much should the company be willing to pay for one additional minute of grinding machine time if the company has made the best use of the existing grinding machine capacity? (R caleulations to 2 decimal places.) Multiple Chaoice O $3.38 $10.95 $6.76 O O $9.31 O Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $120 per unit and 11 has a CM ratio of 25%. The company's fixed expenses are $360,000 per year. The company plans to sell 14,000 knapsacks this year. Required: 1. What are the variable expenses per unit? 01:02:44 Variable expenses per unit 2. Use the equation method for the following: a. What Is the break-even point In units and In sales dollars? Break-even point in units Break-even point in sales dollars b. What sales level In units and In sales dollars Is required to earn an annual profit of $108,000? Sales in units Sales in dollars c. What sales level in units is required to earn an annual after-tax profit of $108,000 If the tax rate Is 25%? Sales in units d. Assume that through negotiation with the manufacturer, Super Sales Company Is able to reduce its variable expenses by $6 per unit. What is the company's new break-even point In units and In sales dollars? (Do not round Intermediate calculations. Round your final answers to the nearest whole number} New break-even point in units New break-even point in sales dollarsFaced with headquarters' desire to add a new product line, Stefan Grenler, manager of Bilti Products' East Division, felt 12 that he had to see the numbers before he made a move. His division's ROI has led the company for three years, and he doesn't want any letdown. Biltl Products Is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to divisional managers who have the highest ROI. Operating results for the company's East Division for last year are given below. 01:02:04 Sales $33, 600, 900 Variable expenses 15, 020, 090 Contribution margin 18, 580, 090 Fixed expenses 16, 228, 098 Operating income $ 2,352, 090 Divisional operating assets 6,720, 090 The company had an overall ROI of 15% last year (considering all divisions). The new product line that headquarters wants Grenler's East Division to add would require an Investment of $3,600,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales $14, 409, 909 Variable expenses sales Fixed expenses $ 3,744, 080 Required: 1. Compute the East Division's ROI for last year, also compute the ROI as It would appear If the new product line were added. (Do not round Intermediate calculations. Round your final answer to the nearest whole number.) Present New Line Total ROI 19% 199 2. If you were In Grenler's position, would you accept or reject the new product line? O Accept Reject 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? O Adding the new line would decrease the company's overall ROL Adding the new line would Increase the company's overall ROI. 4. Suppose that the company's minimum required rate of return on operating assets Is 13% and that performance Is evaluated using residual income. a. Compute East Division's residual Income for last year, also compute the residual Income as it would appear If the new product line were added. Present New Line | Total Residual income b. Under these circumstances, If you were In Grenler's position, would you accept or reject the new product line? Accept Reject1 3 Glover Company makes three products in a single facility. These products have the following unit product costs: Product A B C Direct materials $32.80 $49.30 $55.7@ S Direct labor 20.20 22.80 13.60 (Q m-.oo:az) Variable manufacturing overhead 1.20 0.60 8.98 Fixed manufacturing overhead 13.50 9.1@ 9.78 Unit product cost $67.70 $81.80 579.96 Additional data concerning these products are listed below. Product A B C Mixing minutes per unit 1.20 1.20 0.2 Selling price per unit $58.00 $80.40 s$73.9@ Variable selling cost per unit $ 0.60 % 1.10 S 2.38 Monthly demand in units 2,080 3,300 1,388 A _Mm _am The mixing machines are potentially the constraint in the production facility. A total of 6,520 minutes are available per month on these machines. Direct labor is a variable cost in this company. Required: a. How many minutes of mixing machine time would be required to satisfy demand for all three products? b. How much of each product should be produced to maximize net operating income? c. Up to how much should the company be willing to pay for one additional hour of mixing machine time if the company has made the best use of the existing mixing machine capacity