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Preview File Edit View Go Tools Window Help 96% Thu 2:35 PM a E blackboard pace edu Isabella Georgopoulos O PACE UNIVERSITY My Resource Page Courses Community ePortfolio Bookstore Library Help 10 points save Answer QUESTION 7 Gallerani Corporation has received a request for aspecial order of 6,000 units of product A90 for $21.20 each. Product A90's unit product cost is PM $16.20, determined as follows: Direct materials S 6.10 Direct labor 4.20 HD Variable manufacturing overhead 2.30 Fixed manufacturing overhead 3.60 Unit product cost $16.20 The customer would like modifications made to product A90 that require Gallerani to rent a special mold in the amount of $21,000. This special order would have ho 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 00 PM operating income would increase or decrease by a. $9,000 b. $30,600 Shot C. $30,000 31 AM d. $51,600 e. Correct answer not listed ho 53 PM QUESTION 8 10 points Save Answer Mike Corporation uses residual income to evaluate the performance of its divisions. The company's minimum required rate of return is 14%. In January, the Commercial Products Division had average operating assets of $970,000 and net operating income of $143,700. What was the Commercial Products Division's residual income in January? ho 59 PM a. -$20,118

Explanation / Answer

7) ANSWER = B

company have spare capacity, fixed cost will continue to be incur irrespective of units produced, therefore fixed cost will be ignored

Sale price =21.2* 6000 = 127200

Less- Direct material cost = 6.1*6000= 36600

Less- direct labor = 4.2*6000 = 25200

Less- variable manufacturing cost = 2.3*6000 = 13800

Less- rent expense = 21000

Net operating income = 30600

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