Question 1: Kaplan Company manufactures ties. When 28,000 ties are produced, the costs per unit are:
Direct materials $0.60
Direct manufacturing labor 3.00
Variable manufacturing overhead 1.20
Fixed manufacturing overhead 1.60
Variable selling 0.80
Fixed selling 1.13
The ties normally sell for $22 each. The company has received a special order for 2,000 ties at $10.00 per tie. The company has excess capacity. Compute the amount by which the operating income would change if the order were accepted.
Question 2: The following information pertains to the East Division of Saturn Company:
Net sales $21,000
Variable costs:
Cost of merchandise sold 10,300
Operating expenses 2,700
Fixed costs:
Controllable by segment manager 2,400
Controllable by others 1,000
Unallocated costs 600
Compute the contribution margin. Please show all computations for partial credit consideration.
Question 3: Double Corporation has a joint process that produces two products: XX and YY. Each product may be sold at the split-off point or processed further and then sold. Joint-processing costs for a year are $45000. Product XX can be sold at the split-off point for $32,000. Alternatively, Product XX can be processed further and sold for $40,000. Additional processing costs are $5,000. What is the amount of additional contribution margin can be generated after split-off, by XX?
Question 4: Hubley Company Inc. uses a normal costing system and estimated its overhead costs for the current year to be as follows: fixed, $625,000; variable, $3 per unit. Hubley Company is expected to produce 100,000 units during the year. During the year, the company incurred overhead costs of $925,000 and produced 100,000 units. Calculate the rate to be used to apply manufacturing overhead costs to products.