Use the following to answer questions ( 13-15 )

AL-Madinah Company manufactures toys for children.

It can produce 11,000 toys, but the actual product is 10,000 toys

The selling price of a toy = 150 JD

Direct materials = 300,000 JD

Direct Manufacturing Labor = 325,000 JD

Setups, Material handling, Quality control etc. (that vary with number of batches) for 200 batches = 80,000 JD

Fixed manufacturing costs = 280,000 JD

Fixed Marketing Costs = 250,000 JD

The company received a special order for 1000 toys at 100 JD per toy. The company makes toys for customers in batch sizes of 200 toys per batch.

The special order requires the company to make toys in 25 Toy per batch. 13.If the company accepts the order, the total labor cost equals (2 Points)

325,000

357,500

310,000

301,000 14.If the company accepts the order, the effect on operating income is : (2 Points)

Increase O.I by 78,500

Decrease O.I by 78,500

Increase O.I by 21,500

Decrease O.I by 21,500 15.The company should reject the offer: (2 Points)

False

True