Question

11. A customer requested that PaperMate Corporation fill a special order for 3,000 units of product Q41 for $25.00 a unit. While the product would be modified slightly for the special order, product Q41's normal unit product cost is $21.40: Direct materials $5.70 Direct labor 3.40 Variable manufacturing overhead 5.80 Fixed manufacturing overhead 6.50 Unit product cost $21.40 The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product 041 that would increase the variable cost by $7.00 per unit and that would require an investment of $15,000 in special molds that would have no salvage value. The special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by: a) ($25,200) b) $10,800 c) ($21,300) d) ($5,700) e) None of the above. 12. If a company uses a standard cost system, the variance that is usually most useful in assessing the performance of the purchasing department manager is: a) The price variance b) The efficiency rate variance c) The quantity variance d) The rate variance e) The spending variance S.W

Answer 1

Solution Seling poice per unit Total ane cost oiYet materals ohect labo Vadiale over head nease in Vanle cest 219 Cantaibution per unit $21-5 1 units Nunoer of Gu dered okalCtibutbn fo tecia oder 3 1x 2000 - 9300 Cost o acquisition of Specia meds ISOOD

Ated ineome 2 Total Contstoufdn- cost Of acquritr ofspeanl molds A300 5000 S100Cles optibn e Correct None ofthe abdre Ef he pecil oler is accepted ,the conpeuy ovena net Operating ncome would deceose b