Ali is a student at the University. He recently purchased a car for OMR5,000 to use...

Ali is a student at the University. He recently purchased a car for OMR5,000 to use it for going to the University. Ali also expects that other friends might ask for transportation from him. He expects a total monthly revenue of OMR50. He expects fuel cost to be OMR40 per month. One of Ali's friends is a taxi driver. He offered Ali to take him to University for a monthly fee of OMR10. Because he does not have to drive, Ali believes that he can perform online work that would earn him a monthly revenue of OMR30. What is the differential revenue in this scenario? Select one: O a. OMR40 O b. OMR50 O c. OMR20 O d. OMR10 O e. OMR30
2.The total prime cost of a product was OMR5,200. The variable manufacturing overhead is calculated based on the number of direct labor hours. The variable manufacturing overhead cost per hour is four times the direct labor cost per hour. The fixed manufacturing overhead was OMR2,000. Assuming that direct labor hours were 350 and that the direct labor cost was 30% of direct materials cost, how much is the total manufacturing cost? Select one: O a. OMR12,000 O b. OMR18,000 c. OMR7,200 O d. OMR26,000 O e. OMR28,000

Solutions

Expert Solution

1) Answer Option d) OMR 10

	Self Drive	Hire
Revenue	50.00	30.00
Cost	(40.00)	(10.00)
Profit	10.00	20.00

Differential Revenue= 20-10

=10 OMR

2) Answer Option a) OMR 12,000

Prime Cost	5,200
Material Plus Labour (100+30%)	1
Material Cost (5200/1.3)	4,000
Labour Cost (5200-4000)	1,200
Variable Overhead (1200*4)	4,800
Fixed Overhead	2,000
Total Manufacturing Cost	12,000

ekkarill92 answered 1 year ago

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