Sunland’s Manufacturing Company can make 100 units of a necessary component part with the following costs:
| Direct Materials | $126,000 |
| Direct Labor | $31,000 |
| Variable Overhead | $42,000 |
| Fixed Overhead | $30,000 |
If Sunland’s Manufacturing Company can purchase the component externally for $200,000 and only $2,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
a. Make and save $1000.
b. Buy and save $1000.
c. Make and save $13,000.
d. Buy and save $13,000.
Craft Corporation produces a single product. Last year, the company had a net operating income of $87,440 using absorption costing and $77,000 using variable costing. The fixed manufacturing overhead cost was $6 per unit. There were no beginning inventories.
If 28,900 units were produced last year, then sales last year were:
a. 18,460 units.
b. 27,160 units.
c. 30,640 units.
d. 39,340 units.
