HOMEWORK PROBLEM:

DATA TABLE:

1. The Cozy Company manufactures slippers and sells them at $11 a pair. Variable manufacturing cost is $7.00 a pair, and allocated fixed manufacturing cost is $0.50 a pair. It has enough idle capacity available to accept a one-time-only special order of 35,000 pairs of slippers at $7.50 a pair. Cozy will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales: (a) $0, (b) $17,500 increase, (c) $245,000 increase, or (d) $262,500 increase? Show your calculations The St. Paul Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 15,000 units of Part No. 498 is as follows: 2. (Click to see the manufacturing cost per unit.) ? For St. Paul to achieve an overall savings of $40,000, the amount of relevant costs that would have to be saved by using the released facilities in the manufacture of Part No. 575 would be which of the following: (a) $75,000, (b) $130,000, (c) $85,000 or (d) $165,000? Show your calculations. What other factors might St. Paul consider before outsourcing to Seat