Dinham Kennel uses tenant-days as its measure of activity, an animal housed in the kennel for one day is counted as one tenant- day. During March, the kennel budgeted for 4,200 tenant-days, but its actual level of activity was 4,240 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Revenue Wages and salaries Food and supplies Facility expenses Administrative expenses Total expenses Fixed element per month $ 0 $ 3,100 2,100 8,600 7,100 $ 20,900 Variable element per tenant-day $ 35.10 $ 8.10 14.60 3.60 0.60 $26.90 Actual results for March: Revenue Wages and salaries Food and supplies Facility expenses Administrative expenses $ 136,130 $ 28,610 $ 64,325 $ 23,250 $ 7,101 The spending variance for food and supplies in March would be closest to: Multiple Choice $905 F $905 U $321 F $3210 Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $30. The following cost dato per fan is based on a full capacity of 135,000 fans produced each period. Direct materials Direct labor Manufacturing overhead (508 variable and 50% unavoidable fixed) A special order has been received by Landor for a sale of 15,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $6 per fan for shipping, Landor is now selling 120,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order? $ 9 $ 6 $ 8 Multiple Choice O $25 per fan O $29 per fan $28 per fan $19 per fan w The SP Corporation makes 49,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $ 10.80 Direct labor $9.80 Variable manufacturing overhead $ 4.10 Fixed manufacturing overhead $ 5.05 An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $27.85. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be: Multiple Choice ($93.100) $355,250 154,350 $247,450
