Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct la
ID: 2376879 • Letter: B
Question
Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct labor hours is $4.50 per hour variable and $3 per hour fixed. In May, $232,500 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed. The overhead controllable variance is
$7,500 unfavorable.
$3,750 favorable.
$7,500 favorable.
$1,500 favorable.
Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct labor hours is $4.50 per hour variable and $3 per hour fixed. In May, $232,500 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed. The overhead volume variance is
$7,500 favorable.
$6,000 favorable.
$8,250 favorable.
$3,750 favorable.
Which of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity?
Net income will not be affected.
Additional fixed costs will probably be incurred.
Net income will decrease.
Net income will increase if the special sales price per unit exceeds the unit variable costs
Cara Industries incurred the following costs for 50,000 units:
Cara 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 $4,250 for shipping.
If Cara wants to break even on the order, what should the unit sales price be?
$4.20
$5.05
$2.65
$1.80
Cara Industries incurred the following costs for 50,000 units:
Cara 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 $4,250 for shipping.
If Cara wants to earn $4,000 on the order, what should the unit price be?
$2.60
$1.65
$5.85
$3.45
$7,500 unfavorable.
Explanation / Answer
3) Net income will increase if the special sales price per unit exceeds the unit variable costs
4) 2.65
VARIABLE COST FOR 5000 UNITS = 9000
ADDITIONAL COST = 4250
TOTAL COST FOR ORDER = 13250
C0ST PER UNIT = 2.65
5) 3.45
VARIABLE COST FOR 5000 UNITS = 9000
ADDITIONAL COST = 4250
PROFIT MARGIN = 4000
TOTAL COST FOR ORDER = 17250
C0ST PER UNIT = 3.45
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