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Dayson Corporation makes 30,000 motors to be used in the production of its vacuum cleaners. The average cost per motor at this level of activity is as follows: Direct materials Direct labour... Variable manufacturing overhead. Fixed manufacturing overhead...... $95.00 $86.00 $37.50 $43.50 This motor has recently become available from an outside supplier for $250 per motor. If Dayson decides not to make the motors, none of the fixed manufacturing overhead would be avoidable and there would be no other use for the facilities. What would be the impact on the company's overall net operating income of buying the motors from the outside supplier? 1) $360,000 lower 2) $2,070,000 higher 3) $945,000 lower 4) $1,305,000 higher The following information relates to next year's projected operating results of the Yogurt division of YaoYao Corporation: Contribution margin Fixed expenses Net operating loss $1,000,000 $1,300,000 $(300,000) The Yogurt division is ONE of the three operating divisions of YaoYao Corporation. If the Yogurt division is eliminated, $800,000 of the above fixed expenses could be avoided. What will be the effect on YaoYao's profit next year if Yogurt Division is eliminated? 1) $300,000 increase. 2) $300,000 decrease. 3) $200,000 decrease. 4) $200,000 increase. Next Page Page 41 of 50 Gallop Credit Agency uses a standard cost system for the processing of its credit applications. The labour standard at Gallop is 10 applications per 8- hour day at a standard rate of $15 per hour. During the last pay period, Gallop's credit agents worked 1,920 hours and processed 2,500 applications. The total labour cost for the agents during this period was $29,184. What was Gallop's labour rate variance for this last pay period? O 1) $384 0 2) $384 F 3) $1.200 U 4) $1,200 F Next Page Page 40 of 50 Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product. Standard Hours Standard Rate Direct labour 1.25 hours $12.00 per hour During October, the total factory wages were $364,000, 90% of which were for direct labour. Jackson manufactured 22,000 units of product during October using 28,000 direct labour-hours. The total labour variance for October is 1) $2,400 F 2) $2,400 U 3) $6,000 F 4) $6,000 U Canberrra Ltd makes a product that uses a material with the following standards: Standard quantity 3.0 kilos per unit Standard price $2.00 per kilo In November, the company used 7,500 kilos of direct material to produce 2,400 units of output. The actual cost per kilo paid for the direct materials is $2.10. The materials price variance for November is 1) $240 F 2) $750 U 3) $750 F 4) $240 U