Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below: Alternative A Alternative B Materials costs $ 38,000 $ 51,000 Processing costs $ 34,900 $ 34,900 Equipment rental $ 12,100 $ 12,100 Occupancy costs $ 13,700 $ 20,400 What is the financial advantage (disadvantage) of Alternative B over Alternative A? Multiple Choice $98,700 $108,550 $(19,700) $118,400

The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

	WX		KD		FS
Selling price per unit	$	334.99	$	228.27	$	199.02
Variable cost per unit	$	259.64	$	173.46	$	159.99
Minutes on the constraint		5.60		3.90		3.60

Assume that sufficient time is available on the constrained machine 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? (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-09-13

Multiple Choice

$10.84 per minute

$75.35 per minute

$39.03 per minute

$14.05 per minute

Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 54,000 units per month is as follows:

	Per Unit
Direct materials	$	49.60
Direct labor	$	9.50
Variable manufacturing overhead	$	2.50
Fixed manufacturing overhead	$	20.10
Variable selling & administrative expense	$	4.60
Fixed selling & administrative expense	$	22.00

The normal selling price of the product is $114.10 per unit.

An order has been received from an overseas customer for 3,400 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $2.60 less per unit on this order than on normal sales.

Direct labor is a variable cost in this company.

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $90.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Garrison 16e Rechecks 2017-12-15

Multiple Choice

$22,780

$91,120

($72,000)

($60,860)

Sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 12,900 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows:

Direct materials	$	8.70
Direct labor		5.70
Variable manufacturing overhead		1.50
Fixed manufacturing overhead		3.50
Unit product cost	$	19.40

Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 20% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 2 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 4 minutes on this machine and that has a contribution margin of $5.10 per unit.

When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component? (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2017-09-13

Multiple Choice

$21.95 per unit

$20.45 per unit

$16.60 per unit

$19.15 per unit