Question 5&6

The Varone Company makes a single product called a Hom. The company has the capacity to produce 43,000 Homs per year. Per unit costs to produce and sell one Hom at tha activity level are The regular selling price for one Hom is $60. A special order has been received from the Fairview Company to purchase next year. For this order, the variable selling expense would be reduced by 10%. However, Varone would have to purchase a specialized machine to engrave the fairview name on each Hom in the special order. This machine cost $12,000 and it would have use after the special order was filled. If varone can expect to sell 34,000 Homs next year through regular channels, at what special order price from Fairview should Varone be economically indifferent between either accepting or not accepting this special order? (Choose the closest answer) $51.20 $49.70 $42.20 $42.50 $43.70 Given the following data: The residual income would be (choose the closest answer): $2, 800 $2,000 $6,000 $8,000 $7,000