A study has been conducted to determine if Product A should be dropped. Total sales of the product are $250,000 per year; total variable expenses are $100,000 per year. Total fixed expenses charged to the product are $120,000 per year. The company estimates that $50,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall operating income per year would change by how much? A. An increase of $80,000 B. A decrease of $80,000 C. An increase of $100,000 D. A decrease of $100,000 General Mattress (GM) Company sells mattresses at a regular price of $800. The total cost per unit is $700, which consists of $200 direct labor per unit. $250 direct materials per unit, 550 fixed overhead per unit, and $200 variable overhead per unit. A hotel chain offered to buy 1,000 mattresses from GM at a discounted price of $650. This is a one-time special order (le, a short-term decision), and GM has enough spare capacity to accommodate this order. If GM accepts the special order, GM's operating income will A increase by $50,000 B. Remain the same c. Decrease by $50,000 D. Decrease by $150,000 The KC Company has established standards as follows: Direct Material 3kgs @ $9/kg = $27 per unit Direct Labour 2hr. $14.25/hour $28.50 per unit Variable Manufacturing Overhead 2hr @ $1.75/hour = $3.5 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. Units Produced 1.450 Direct Material Used 5,000 kg Direct Materials Purchased (5000kg) $37.500 Direct Labour Cost (2500 hrs) S36,250 Variable Manufacturing Overhead Cost Incurred S4,950 The company applies variable manufacturing overhead to products on the basis of direct labour hours. What was the labour rate variance? A $625 Unfavourable B. $3,500 Favourable C. $625 Favourable D. $3,500 Unfavourable