The results of a mathematics placement exam at two different campuses of Mercy College follow Population Standard Campus Sample Size 332 Sample Mean 35 Deviation 8 2 312 33 7 The college wants to test the hypothesis that the mean score on Campus 1 is higher than on Campus 2 using a 0.05 level of significance. What is the computed value of the test statistic? Prepare incremental analysis concerning make-or-buy decision. (LO 4), E XLS E7-8 Innova uses 1,000 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows. Direct materials Direct labor Overhead Total $ 65.00 45.00 126.50 $236.50 Overhead costs include variable material handling costs of $6.50, which are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 60% variable costs and 40% fixed costs. A vendor has offered to supply the IMC2 component at a price of $200 per unit. Instructions (a) Should Innova purchase the component from the outside vendor if Innova's capacity remains idle? (b) Should Innova purchase the component from the outside vendor if it can use its facilities to manufacture another product? What information will Innova need to make an accurate decision? Show your calculations. (c) What are the qualitative factors that Innova will have to consider when making this decision? Exercises 317 E7-9 Rachel Rey recently opened her own basketweaving studio. She sells finished bas- kets in addition to the raw materials needed by customers to weave baskets of their own. Rachel has put together a variety of raw material kits, each including materials at various stages of completion. Unfortunately, owing to space limitations, Rachel is unable to carry all varieties of kits originally assembled and must choose between two basic packages. The basic introductory kit includes undyed, uncut reeds (with dye included) for weav- ing one basket. This basic package costs Rachel $14 and sells for $30. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Rachel is able to produce the second kit by using the basic materials included in the first kit and adding one hour of her own time, which she values at $18 per hour. Because she is more efficient at cutting and dying reeds than her average customer, Rachel is able to make two kits of the dyed reeds, in one hour, from one kit of undyed reeds. The Stage 2 kit sells for $35. Instructions Determine whether Rachel's basketweaving shop should carry the basic introductory kit with undyed and uncut reeds or the Stage 2 kit with reeds already dyed and cut. Prepare an incremental analysis to support your answer. Use incremental analysis for further processing of materials decision. (LO 5), AN E8-4 Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's anticipated annual volume of 30,000 units. Use cost-plus pricing to determine selling price. (LO 2), AP Per Unit Total Direct materials $17 Direct labor $ 8 Variable manufacturing overhead $11 Fixed manufacturing overhead $300,000 Variable selling and administrative expenses $4 Fixed selling and administrative expenses $150,000 The company uses a 40% markup percentage on total cost. Instructions (a) Compute the total cost per unit. (b) Compute the target selling price. XLS E7-4 Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular as an undergarment for sports activities. Operating at capacity, the company can produce 1,000,000 undergarments of Y-Go a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Total $2,000,000 Per Undergarment $2.00 0.75 750,000 1.00 1,000,000 1.50 1,500,000 0.25 250,000 $5.50 Use incremental analysis for special order. (LO 3), AN Totals $5,500,000 The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 250,000 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army's offer, it will not incur any variable selline exnenses related to this order