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1) Advo Company is purchasing carrying cases at a delivered cost of $8 per unit. The company, currently operating below full capacity. The costs to produce carrying cases is expected to be:

Direct materials	3.00
Direct labor	4.00
Variable factory overhead (20% of direct labor)	.60
Total variable cost per unit	7.60

If Advo Company makes the carrying cases instead, fixed factory overhead costs will not increase. The selling price of the carrying case to customers will remain the same at $10. In a decision matrix for differential analysis, Advo can ignore

Group of answer choices

the selling price of $10 and the fixed cost

the selling price of $10 and the purchasing cost of $8

the selling price of $10 and the variable cost of $7.60

the fixed cost and the purchasing cost of $8.00

2)

Gene Company expects to operate at 90% of productive capacity. Total manufacturing costs for the production of 10,000 batteries are budgeted as follows:

Direct materials $1.00 per unit	$1.00 per unit	$10,000
Direct labor $.80 per unit	..80 per unit	8,000
Variable factory overhead $.60 per unit	.60 per unit	6,000
Total fixed factory overhead		2,000
Total manufacturing costs		$ 26,000

Gene Company normally sells its GeneUS brand battery for $4 each. It has the opportunity to sell an additional 1,000 generic-labeled batteries for $2.50 each. The additional sales will not interfere with normal production or increase selling or administrative expenses. In a decision matrix for differential analysis, differential income or (loss) will be equal to

Group of answer choices

($2.50 selling price - $2.40 variable cost) times 1,000 units

($4.00 selling price - $2.60 total cost) times 1,000 units

($2.50 selling price - $2.60 total cost) times 1,000 units

($4.00 selling price - $2.50 variable cost) times 1,000 units

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