The Immanuel Company has just obtained a request for a special order of 6,000 jigs to be shipped at the end of the month at a selling price of $7 each. The company has a production capacity of 90,000 jigs per month with total fixed production costs of $144,000. At present, the company is selling 80,000 jigs per month through regular channels at a selling price of $11 each. For these regular sales, the cost for one jig is:
Variable Production Cost
$
Fixed Production Cost
$
Variable Selling Expense
$
If the special order is accepted, Immanuel will not incur any selling expense; however, it will incur shipping costs of $ per unit.
Q1.
If Immanuel accepts this special order, what will be the increase in the monthly net operating income
A)  $  1,800.    B)  $  3,600.    C)  $12,600.    D)  $14,400.
Q2.
Suppose that total regular sales of jigs are 85,000 units per month, and all other conditions remain the same. If Immanuel accepts the special order, what will be the change in monthly operating income
A)  $3,600 decrease.    B)  $5,400 decrease.    C)  $7,200 increase.    D)  $14,000 increase.
Question 1 answer
Revenue achieved      (6000 X $7)                                                            $ 42,000
Less: costs ($++.30 = $ X 6000)                                            40,200
Increase in operating income                                                                          1,800
Question 2 Answer:
Revenue achieved    ( 6000 units * $7)                                                      $42,000
Less. Costs;
      + Lost Opportunity Costs
    ($ + $ + [( $ –  -  * 1000/6000]
    $ +[$ * 1000/6000]
    $ + $
    $ * 6000                                                                                            ($ 34,800)
Net increase                                                                                                  $    7,200 
Brown Company makes four products in a single facility. These products have the following unit product costs:
Product
A
B
C
D
Direct Materials
$
$
$
$
Direct Labour
$
$
$
$ 
Variable Manufacturing Overhead
$ 
$ 
$ 
$ 
Fixed Manufacturing Overhead
$
$
$
$
Unit Product Cost
$
$
$
$
Additional data concerning these products are listed below.
Product
A
B
C
D
Grinding Minutes per Unit
Selling Price per Unit
$
$
$
$
Variable Selling Cost per Unit
$ 
$ 
$ 
$ 
Monthly Demand in Units
3,000
2,000
2,000
4,000
The grinding machines are potentially a constraint in the production facility. A total of 10,500 minutes are available per month on these machines.
Direct labour is a variable cost in this company.
Q3
How many minutes of grinding machine time would be required to satisfy demand for all four products
A)  10,500 minutes.    B)  10,700 minutes.    C)  10,800 minutes.    D)  11,000 minutes.
Q4
Which product makes the LEAST profitable use of the grinding machines
A)  Product A.    B)  Product B.    C)  Product C.    D)  Product D.
Q3
sln
How many minutes of grinding machine time would be required to satisfy demand for all four products
                      A                      B                          C                        D
Demand        3000                2000                    2000                  4000
Grinding
  Minutes        2                                                                   
Tot Minutes    6000                2200                    1400                    1200
  Total = 10,800 minutes
    Question 4 sln                    A                        B                          C                        D
for the sale
Selling price
D Materials
D Labour
VMOH
VSE
. / unit
Minutes / unit
2
. / unit
Least                              xxxxxxx
Q5.
Juett Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 70,000 units per month is as follows:
Direct Materials
$
Direct Labour
$ 
Variable Manufacturing Overhead
$ 
Fixed Manufacturing Overhead
$
Variable Selling & Administrative Expense
$ 
Fixed Selling & Administrative Expense
$ 
The normal selling price of the product is $ per unit.
An order has been received from an overseas customer for 2,000 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $ less per unit on this order than on normal sales.
Direct labour is a variable cost in this company.
Required:
a)Suppose there is ample idle capacity to produce the units required by the overseas customer, and the special discounted price on the special order is $ per unit. By how much would this special order increase (decrease) the company's net operating income for the month
b)Suppose the company is already operating at capacity when the special order is received from the overseas customer. What would be the opportunity cost of each unit delivered to the overseas customer
c)  Suppose there is not enough idle capacity to produce all of the units for the  overseas customer, and accepting the special order would require cutting back on production of 1,300 units for regular customers. What would be the minimum acceptable price per unit for the special order

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