Assume that 40% of the fixed overhead can be avoided if part C62 is not made by Macomb. Should Macomb purchase the part from the outside supplier? (a) No, income will decrease by $10,500. income will decrease by $7,500. (c) Yes, income will increase by $7,500. (d) Yes, income will increase by $10,500. 14. An unfavorable direct labor quantity variance may be caused by: (a) Paying workers higher wages than expected. (b) Using higher skilled workers to perform work than those called for by the standards. Worker fatigue or carelessness. (d) Higher pay rates mandated by union contracts. 15. The Freeport Utensil Company manufactures kitchen utensils. The company is currently producing below full capacity. A company has approaches Freeport with an offer to buy 20,000 utensils at $0.75 each. Freeport sells it utensils wholesale for $0.85 and the average cost per unit to Freeport is $0.8 of which $0.12 is fixed cost and will not change if the order is accepted. Freeport were to accept the offer from the company, what would be the effe on Freeport's operating income? (a) $ 400 increase. (b) $ 800 increase. @ $1,600 decrease. (d) $2,000 decrease. 1.00 ISS She Direct labor Variable manufacturing overhead Fixed manufacturing overhead 5.00 No variable marketing costs would be incurred on the order and the fixed manufacturing overhead will not change in total if the order is accepted. Should Galesburg accept the order? (a) No, income will decrease by S9,000. (b) Yes, income will increase by S6,000. c) Yes, income will increase by S9,000 (d) No, income will decrease by $3,000. Macomb Company makes smart phones. Currently, Macomb makes all components for the smart phones it produces. An outside company has offered to supply one component, part number C62, for $8 cach. Macomb uses 15,000 of these components per year. Unit costs of C62 are as follows. 4.00 MACOMB COMPANY UNIT COSTS FOR PRODUCTION OF ONE UNIT OF PART C62 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 2.00 1.50 3.00