Question 17

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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 $6,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

Select one:

a. buy and save $2,500

b. Make and save $2,500

c. Buy and save $500

d. Buy and save $6,500

e. Make and save $500

Question 18

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The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials efficiency variance for last month was

Select one:

a. $3,200 unfavorable

b. $5,700 unfavorable.

c. $3,200 favorable

d. $2,400 favorable.

e. $5,600 unfavorable.