Question 13

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Fornelli, Inc. can produce 100 units of a component part with the following costs: Direct Materials $15,000

Direct Labor 6,500

Variable Overhead 16,000

Fixed Overhead 11,000

f Fornelli, Inc. can purchase the component part externally for $44,000 and only $4,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

Select one:

a. Make and save $500

b. Buy and save $500

c. buy and save $2,500

d. Buy and save $6,500

e. Make and save $2,500

Question 14

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In producing product AA, 6,300 pounds of direct materials were used at a cost of $1.10 per pound. The standard was 6,000 pounds at $1.00 per pound. The direct materials efficiency variance is:

Select one:

a. $300 unfavorable.

b. $330 favorable.

c. $3,150 unfavorable.

d. $300 favorable

e. $330 favorable.