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Hamby Corporation is preparing a bid for a special order that would require 780 liters of material W34C. The company already has 640 liters of this raw material in stock that originally cost $8.30 per liter. Material W34C is used in the company's main product and is replenished on a periodic basis. The resale value of the existing stock of the material is $7.60 per liter. New stocks of the material can be readily purchased for $8.35 per liter. What is the relevant cost of the 780 liters of the raw material when deciding how much to bid on the special order?

A. $6,481
B. $6,376
C. $6,513
D. $5,928

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Schickel Inc. regularly uses material B39U and currently has in stock 460 liters of the material for which it paid $3,128 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $5.95 per liter. New stocks of the material can be purchased on the open market for $6.45 per liter, but it must be purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of 760 liters of the material to be used in a job for a customer. The relevant cost of the 760 liters of material B39U is:

A. $4,902
B. $4,672
C. $4,522
D. $6,450

One of the employees of Davenport Corporation recently was involved in an accident with one of the corporation's delivery vans. The corporation is either going to repair the damaged van or sell it as is and buy a comparable used van. Information related to this decision is provided below: Initial cost of the damaged van $30,000 Accumulated depreciation to date on van $18,000 Salvage value of van immediately before crash $9,000 Salvage value of van immediately after crash $1,000 Cost to repair damaged van $5,000 Cost of a comparable used van $10,000 Based on the information above, Davenport would be financially better off:

A. $1,000 by buying the comparable van.
B. $2,000 by buying the comparable van.
C. $2,000 by repairing the damaged van.
D. $4,000 by repairing the damaged van.

Gallerani Corporation has received a request for a special order of 6,000 units of product A90 for $21.20 each. Product A90's unit product cost is $16.20, determined as follows: Direct materials $ 6.10 Direct labor 4.20 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 3.60 Unit product cost $ 16.20 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $4.20 per unit and that would require an investment of $21,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

A. $(18,600)
B. $(16,200)
C. $30,000
D. $5,400

Danny Dolittle makes crafts in his spare time and always sells everything he makes at local craft shows. Danny specializes in four products. Because Danny's time is limited before the next craft show, he is trying to decide how to use his time to the best advantage. Information related to the four products that Danny produces are shown below: Rag Dolls Pot Holders Bread Baskets Finger Puppets Contribution margin per unit $ 8 $ 2 $ 12 $ 6 Contribution margin ratio 40 % 25 % 32 % 30 % Time required per unit (in hours) 1.4 0.5 3.5 2.0 Rank the products from the most profitable to the least profitable use of the constrained resource.

A. Rag Dolls, Pot Holders, Bread Baskets, Finger Puppets
B. Rag Dolls, Bread Baskets, Finger Puppets, Pot Holders
C. Pot Holders, Rag Dolls, Finger Puppets, Bread Baskets
D. Bread Baskets, Rag Dolls, Finger Puppets, Pot Holders

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