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*Amazon makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below: TC GL NG

*Amazon makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below:

TC

GL

NG

Selling price per unit

$

494.40

$

449.43

$

469.68

Variable cost per unit

$

395.20

$

320.21

$

373.92

Minutes on the constraint

8.00

7.10

7.60

Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource?

Select one:

a.

$95.76 per unit

b.

$18.20 per minute

c.

$129.22 per unit

d.

$12.40 per minute

*Amazon is presently making part U98 that is used in one of its products. A total of 7,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity:

Per Unit

Direct materials

$

3.70

Direct labor

$

3.60

Variable overhead

$

1.40

Supervisor's salary

$

4.00

Depreciation of special equipment

$

3.90

Allocated general overhead

$

4.10

An outside supplier has offered to produce and sell the part to the company for $17.10 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 fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. If management decides to buy part U98 from the outside supplier rather than to continue making the part, what would be the annual financial advantage (disadvantage)?

Select one:

a.

$25,200

b.

$30,800

c.

($25,200)

d.

($30,800)

Amazon, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price

$

115

Units in beginning inventory

0

Units produced

6,600

Units sold

6,400

Units in ending inventory

200

Variable costs per unit:

Direct materials

$

26

Direct labor

$

46

Variable manufacturing overhead

$

7

Variable selling and administrative expense

$

9

Fixed costs:

Fixed manufacturing overhead

$

105,600

Fixed selling and administrative expense

$

51,200

What is the unit product cost for the month under absorption costing?

Select one:

a.

$88 per unit

b.

$79 per unit

c.

$95 per unit

d.

$104 per unit

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