Reference no: EM133065192

Questions - Q1. Grant's Kitchens is approached by Ms. Tammy Wang, a new customer, to fulfill a large one-time-only special order for ONE unit of product similar to ONE unit offered to regular customers. The following per unit data apply for selling ONE unit to regular customers:

Direct materials $455

Direct labor 300

Variable manufacturing overhead 45

Fixed manufacturing overhead 100

Total manufacturing costs 900

Regular selling price $1,440

Grant's Kitchens has excess capacity. Ms. Wang wants the cabinet in cherry rather than oak, so direct material costs will increase by $30 per unit.

For Grant's Kitchens, what is the minimum acceptable price of this one-time-only special order for ONE unit for Grant's Kitchens to earn at least $400 on the special order?

a. $830

b. $1,030

c. $1,230

d. $1,430

Q2. Gamble Company has only 25,000 hours of machine time each month to manufacture its two products. Product X has a contribution margin of $50, and Product Y has a contribution margin of $64. Product X requires 5 hours of machine time, and Product Y requires 8 hours of machine time. If Gamble Company can sell up to maximum of 4,000 units of Product X and 4,000 units of Product Y, at the optimum product mix of X & Y, the company will have a total contribution margin of

a. $250,000.

b. $240,000.

c. $210,000.

d. $200,000.