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Bohlen Corporation produces and sells a single product. Data concerning that product appear below:

Per Unit Percent of Sales

Selling Price $180 100%

Variable Expenses.36 20%

Contribution margin$144 80%

Fixed expenses are $716,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Bohlen Corporation. Refer to the original data when answering this question. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $16 per unit. In exchange, the sales staff would accept a decrease in their salaries of $84,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 600 units.

1) What should be the overall effect on the company's monthly net operating income of this change?

A) increase of $74,400

B) increase of $64,800

C) decrease of $103,200

D) increase of $928,800

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Galla Corporation makes a product with the following standard costs:

Direct Materials:

Standard Quantity or Hours: 8.2 pounds

Standard Price or Rate: $7.00 per pound

Standard Cost per unit: $57.40

Direct labor:

Standard Quantity or Hours: 0.4 hours

Standard Price or Rate$20.00 per hour

Standard Cost per unit: $8.00

Variable overhead:

Standard Quantity or Hours: 0.4 hours

Standard Price or Rate: $2.00 per hour

Standard Cost per unit: $0.80

The company budgeted for production of 2,400 units in June, but actual production was 2,500 units. The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output. The company purchased 21,700 pounds of the direct material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. 2) The variable overhead rate variance for June is:

A) $196 U

B) $200 F

C) $200 U

D) $196 F