1. Viet Company manufactures ice-makers for refrigerators. The cost per unit to make 20,000 units of...
1. Viet Company manufactures ice-makers for refrigerators. The cost per unit to make 20,000 units of ice- maker is:
Direct Materials $7 per unit
Direct Labor $12 per unit
Variable Overhead $6 per unit
Fixed Overhead $9 per unit
Total $34 per unit
Nam Company has offered to sell 20,000 ice-makers to Viet Company for $28 per unit. Viet Company determines that $5 of the fixed overhead would be eliminated if it accepts the offer and the freed up factory space could be used to make water filtration units that would generate a profit of $80,000. Should Viet Company accept Nam Company’s offer? Show calculations to support your answer.
2. A firm has a target rate of return of 15% and calculated a negative net present value for a project. That means the project will earn:
a. more than 0%. b. less than 0%.
c. more than 15%. d. less than 15%.
3. Capital budgeting decisions include: a. the time value of money.
b. a target rate that a project must exceed to be accepted. c.
both of the above.
d. none of the above.
4. Which of the following variances explain the amount of overapplied or underapplied manufacturing overhead a firm had at the end of the year?
a. The direct materials variances and the direct labor
variances. b. The variable manufacturing overhead variances.
c. The fixed manufacturing overhead variances.
d. Both the variable and fixed manufacturing overhead
variances.
5. When faced with a special order request, a firm should consider whether accepting the order will:
-
affect current sales.
-
require additional materials not used by the firm in making products.
-
required additional equipment not currently used by the firm in making products.
-
all of the above.
Homework Answers
Answer: 1:
| Yes, Viet Company should accept Nam Company’s offer as they will save $ 120,000.00 ($ 600,000 to make-$ 480,000 to buy) by taking the offer. |
Calculations/ Formulas:
* "answering question 1 as per guidelines, pls resubmit balance questions for answering. Pls, upvote if you like the answer."
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