Reference no: EM133127337

Question 1 - Suppose a company operates with some spare capacity and receives a one-time special order of 5,000 units that has a contribution margin per unit of special order of €11. The contribution margin earned on regular customers (unaffected by this deal) is much higher, at €32. What is the contribution margin that managers should consider, in order to choose whether to accept or reject the offer?

a. €11

b. €32

c. €22

d. None of the above

Question 2 - Danilo Walls, Inc. uses departmental cost driver rates to allocate manufacturing indirect costs to jobs. Manufacturing indirect costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. The budget provided the following estimates for the coming year, and actual data were collected in the first quarter of the year related to Job #12.

Data for the firm (master budget)	Machining	Finishing
Direct labor hours	55,000	40,000
Machine hours	12,000	29,000
Direct labor costs	400,000 €	800,000 €
Manufacturing overhead costs	315,000 €	215,000 €
Data for Job #12 (actual)	Machining	Finishing
Direct labor hours	120	90
Machine hours	80	20
Direct materials cost	3,460 €	1,700 €
Direct labor cost	120 €	632 €

1. What is the indirect cost rate that will be used to allocate overhead costs of the machining department at Danilo Wall, Inc.?

1. €5.38

2. €9.64

3. €20.88

4. €26.25

2. What is the total amount of manufacturing overheads that will be allocated to Job #12 under normal job costing?

1. €2,100

2. €8,496

3. €2,584

4. €5,680