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##### The Varian Company makes a single product called a...

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The Varian Company makes a single product called a Horn. The company has the capacity to produce 40,000 Horns per year. Per unit costs to produce and sell one Horn at that activity level are: Direct material $20 Direct labor $10 Variable manufacturing Overhead $5 Fixed Manufacturing Overhead $7 Variable Selling Expense $8 Fixed Selling Expense $2 The regular selling price for one Horn is $60. A special order has been received at Varian from the Fairview Company to purchase 8,000 Homs next year at 15% off the regular selling price. If this special order were accepted, the variable selling expense would be reduced by 25%. However, Varian would have to purchase a specialized machine to engrave the Fairview name on each Horn in the special order. This machine would cost $12,000 and it would have no use after the special order was filled. The total fixed costs, both manufacturing and selling, are constant within the relevant range of 30,000 to 40,000 Homs per year. Assume direct labor is a variable cost. 4. If Varian can expect to sell 32,000 Homs next year through regular channels and the special order is accepted at 15% off the regular selling price, the effect on net operating income next year due to accepting this order would be a: A. $52,000 increase B. $80,000 increase C. $24,000 decrease D. $68,000 increase 5. If Varian can expect to sell 32,000 Homs next year through regular channels, at what special order price from Fairview should Varian be economically indifferent between either accepting or not accepting this special order? A. $51.00 B. $48.20 C. $42.50 D. $39.60 6. If Varian has an opportunity to sell 37,960 Homs next year through regular channels and the special order is accepted for 15% off the regular selling price, the effect on net operating income next year due to accepting this order would be a: A. $33,320 decrease B. $33,320 increase C. $35,480 decrease D. $35,480 increase I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road, Peanut Butter, and Fruity Tooty. It sold 15,000 gallons last year. For every five gallons of ice cream sold, one gallon is Fruity Tooty and the remainder is split evenly between Peanut Butter and Rocky Road. Fixed costs for I Scream For Ice Cream are $27,000 and additional information follows: Rocky Road Peanut Butter Fruity Tooty Sales price per pound $ 5.50 $ 4.00 $ 3.50 Variable cost per pound $ 3.00 $ 2.00 $ 2.50 Breakeven sales in dollars for I Scream For Ice Cream is A) $22,275. B) $17,357. C) $60,750. D) $33,750. 31. Here are selected data for Campbell Company: Cost of goods manufactured $320,000 Work in process inventory, beginning 109,000 Work in process inventory, ending 104,000 Direct materials used 73,000 Manufacturing overhead is allocated at 60% of direct labor cost. What was the amount of direct labor costs? A) $78,000 B) $162,581 C) $151,250 D) $242,000 32. Job 140 requires $12,000 of direct materials, $6,700 of direct labor, 550 direct labor hours, and 270 machine hours. It also requires 9 hours of inspection at $40 per hour. Manufacturing overhead is computed at $28 per direct labor hour used and $42 per machine hour used. The total amount of overhead allocated is A) $34,100. B) $26,740. C) $45,440. D) $15,400.

Paper#2092 | Written in 18-Jul-2015

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