The management of Delta Pet Supplies has calculated the following variances:

Direct materials cost variance	$11,000 U
Direct materials efficiency variance	38,000 F
Direct labor cost variance	15,500 F
Direct labor efficiency variance	13,500 U
Total variable overhead variance	8,500 F
Fixed overhead cost variance	3,500 F

When determining the total production cost flexible budget variance, what is the fixed overhead cost variance of the company?

A.

$13,500 U

B.

$12,000 F

C.

$3,500 F

D.

$11,000 U

Dell Productions is a price-taker. The company produces large spools of electrical wire in a highly competitive market; thus, it uses target pricing. The current market price is $825 per unit. The company has $3,100,000 in average assets, and the desired profit is a return of 6% on assets. Assume all products produced are sold. The company provides the followinginformation:

Sales volume	100,000	units per year
Variable costs	$700	per unit
Fixed costs	$13,000,000	per year

Currently the cost structure is such that the company cannot achieve its profit objective and must cut costs. If fixed costs cannot be reduced, how much reduction in variable cost per unit will be needed to achieve the desiredtarget? (Round your answer to the nearest cent.)

A.

reduction in variable cost per unit by $700.00

B.

reduction in variable cost per unit by $6.86

C.

reduction in variable cost per unit by $5.00

D.

reduction in variable cost per unit by $125.00