Question

1. Griffith Company manufactures suitcases. The company is currently producing and selling 40,000 units per year and it has the capacity to produce 42,000 units per year.

The following information relates to current production:

Sale price per unit	$195
Costs per unit:
Variable Manufacturing	$80
Fixed Manufacturing	$15
Variable Selling and Administrative	$45
Fixed Selling and Administrative	$10

Griffith is considering an order from a new customer for 2,000 suitcases at a total price of price of $250,000. Assume that accepting this special order would not affect regular sales. Which answer best explains what Griffith should decide about the proposed special sales order?

1. Reject, because the sales price per unit would be less than $195.
2. Accept, because it would fill the remaining capacity.
3. Accept, because revenue would increase by $250,000.
4. Reject, because operating income would not increase.

2.

1. Rapinoe, Inc. has forecasted its sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units. Rapinoe's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 1,500 units. Selling and administrative expenses are budgeted to be $15,000 per month plus $5 per unit sold. What are budgeted selling and administrative expenses for September?
   1. $32,500           
   2. $67,500     
   3. $52,500     
   4. $30,000

3.

1. The Prinz Company had an unfavorable direct material flexible budget (spending) variance and a favorable direct material flexible budget quantity variance. A logical explanation for this is:
   1. They purchased cheaper material than budgeted.
   2. They purchased higher quality material than budgeted
   3. They made fewer products than they budgeted for
   4. Both a and c above are logical explanations

Answer 1