Quiz 10.docx - 1 Fortran Industries produces burner...

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1. Fortran Industries produces burner elements for stoves. Each element sells for $20, and the company sells approximately 2,000,000 elements each year. Unit cost data for the year follows: Direct material $5.00 Direct labor 3.00 Other costs: Variable Fixed Manufacturing $2.50 $5.00 Distribution 1.50 1.00 2. The unit cost of an element for variable costing inventory purposes is: a . $10.50 b . $15.50 c . $7.00 d . $12.00 10 points QUESTION 2 1. Chapman Corporation manufactures lamps. Management is currently studying whether the company should continue to make the cord assembly or purchase them from Graham Company for $5.25. Chapman needs 20,000 cord assemblies a year. If the part is purchased, the company can not use the released facilities for another manufacturing activity. Chapman’s unit cost to manufacture the cord assembly is: Direct materials $2.25 Direct labor 1.75 Factory overhead (70% fixed) 2.50 Total $6.50 2. The decision Chapman should make and the related differential income is: Decision Differential Income a . Make the assembly $25,000
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