Q1. If the standard hours allowed are less than the standard hours at normal capacity, the volume variance
A) cannot be calculated.
B) will be favorable.
C) will be unfavorable.
D) will be greater than the controllable variance.
Q2. Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
A) Income would decrease by $4,000.
B) Income would increase by $4,000.
C) Income would increase by $70,000.
D) Income would increase by $20,000.
Q3. Martin Company incurred the following costs for 50,000 units:
Variable costs $180,000
Fixed costs 240,000
Martin has received a special order from a foreign company for 5,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $8,500 for shipping.
If Martin wants to break even on the order, what should the unit sales price be?
A) $10.10
B) $5.30
C) $3.60
D) $8.40
Q4. Martin Company incurred the following costs for 50,000 units:
Variable costs $180,000
Fixed costs 240,000
Martin has received a special order from a foreign company for 5,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $8,500 for shipping.
If Martin wants to earn $8,000 on the order, what should the unit price be?
A) $3.30
B) $11.70
C) $5.20
D) $6.90
Q5. Tex's Manufacturing Company can make 100 units of a necessary component part with the following costs:
Direct Materials $60,000
Direct Labor 10,000
Variable Overhead 30,000
Fixed Overhead 20,000
If Tex's Manufacturing Company can purchase the component externally for $110,000 and only $5,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
A) Make and save $5,000
B) Buy and save $5,000
C) Make and save $15,000
D) Buy and save $15,000
Q6. Fornelli, Inc. can produce 100 units of a component part with the following costs:
Direct Materials $30,000
Direct Labor 13,000
Variable Overhead 32,000
Fixed Overhead 22,000
If Fornelli, Inc. can purchase the component part externally for $88,000 and only $8,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
A) Make and save $1,000
B) Buy and save $1,000
C) Make and save $5,000
D) Buy and save $13,000\