Baker Company, an Ohio company that sells a branded product regionally to retail customers in Midwest. It normally sells its product for $40 per unit; however, it has received a one-time offer from a private-brand company on the West Coast to buy 1,000 units at $25 per unit. Even though the company has excess capacity to produce the units, the president of the company immediately rejected the offer; however, the chief accountant stated that it might be a profitable opportunity for the company, even though $25 is below its unit cost of $28, calculated as follows: Direct materials $12.00; Direct labor $4.00; Variable overhead $7.00; Depreciation & other fixed overhead $5.00; Total unit cost $28.00; Also, the special order will save $2 per unit in packaging costs since the product will be bulk packaged instead of being individually packaged. Calculate the amount of profit or loss per unit if Baker accepts the special order.

A.$4 profit

B.$2 profit

C.$2 loss

D.$4 loss

Which of the following characteristics applies to process costing but not to job order cost accounting?

A.Use of a predetermined overhead rate

B.Identifiable units of production

C.Equivalent units of production

D.Use of a single work-in-process account

A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required direct materials of $50,000 and direct labor of $20,000?

A.$25,000

B.$5,000

C.$16,000

D.$15,000