Tara produces color cartridges for inkjet printers. Suppose cartridges are sold to mail order Distributors for $12 each and that manufacturing and other costs are as follows:
Variable cost per unit:
Direct Material $4
Direct labor 0.40
Factory over 0.50
Distribution 0.10
Total = $5.00
Fixed Cost per month:
Factory overhead $17k
Selling and administration 8k
Total = $25,000
The variable distribution cost are for transportation to mail order distributors. Also assume the current monthly production and sales volume is 20,000 and monthly capacity is 25,000 units.
If the sales price per unit increases by two dollars and the unit sales 20,000 units, Taras Monthly profit would:
A. Decrease by $22k
B. Not change
C. Increase by $36,000
D. Increase by $22,000
E. none of the above
In April Orc’s Incurred actual overhead cost of $1,050,000 And used 30,000 hours. How much was Orc’s Over or under applied overhead for the month of April?
A. $75k under applied
B. $37,500 over applied
C. $37,500 under applied
D. $75k over applied
E. None of the above