a) Golden, Inc. has been manufacturing 5,000 units of Part 10541, which is used in one of its products. At this level of production, the unit product cost of Part 10541 is as follows: Direct Materials $2 Direct Labour $8 Variable Manufacturing Overhead $4 Fixed Manufacturing Overhead $6 Unit Product Cost $20

Brown Company has offered to sell Golden 5,000 units of Part 10541 for $19 a unit. Golden has determined that one-third of the fixed manufacturing overhead will continue even if Part 10541 is purchased from Brown. Assume that direct labour is an avoidable cost in this decision. What would be the impact on NI of the decision to buy from Brown Compnay rather than manufacturing the parts internally? Multiple Choice $25,000 decrease in NI $5,000 increase in NI $25,000 increase in NI $5,000 decrease in NI

b) ABC Firm is a specialty retail firm that sells only one product. It prepares a rolling budget for the upcoming three months. At the end of October, the cash budget contained the following summary information:

November December January Cash Available 86,000 58,000 73,000 Total Cash Payments 69,000 44,000 66,000 Cash Over or Short 17,000 14,000 7,000

You may assume that all the numbers currently included are correctly computed. The firm has a policy of maintaining a minimum cash balance of $15,000. At the end of October, a loan of $6,000 was outstanding. The loan carries an interest rate of 2%. Interest payments must be made each month based on the balance outstanding at the end of the prior month.

How much, if any, can the firm pay on its loan in November ?

Multiple Choice $0 $2,000 $1,990 $1,880