C. ($55,400) D. ($21,300) 34. A study has been conducted to determine if one of

Question

C. ($55,400) D. ($21,300) 34. A study has been conducted to determine if one of the departments should be discontinued. The contribution margin in the departmen in Parry Company ixed expense t is $50,000 per year. s charged to the department are $65,000 per year. It is estimated that These data indicate that if the tixed expenses could be eliminated if the department is discontinued. operating income would department is discontinued, the company's overall net A. decrease by $25,000 per year B. increase by $25,000 per year C. decrease by $10,000 per year D. increase by $10,000 per year 35. Discover Motor Company uses a standard cost system to collect costs related to ction of its toothpick motors. The direct labor standard for each toothpick motor is 1.25 hours at a standard cost of $9.50 per hour. During the month of May, Dis cover's toothpick motor production used 5,900 direct labor- hours at a total direct labor cost of $54,575. This resulted in production of 4,800 toothpick motors for May. What is Discover's labor efficiency variance for the month of May? A. $950 favorable B. $1,475 favorable C. $8,975 unfavorable D. $10,450 unfavorable

Explanation / Answer

34 The company's overall net income would decrease by $10000 (50000-40000) 35 Labor efficiency variance = 9.5*(5900-4800*1.25)= 950 Favorable

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