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Question 1
Last year, Gransky Corporation's variable costing net operating income was $52,100, and its ending inventory increased by 400 units. Fixed manufacturing overhead cost was $7 per unit. What was the absorption costing net operating income last year?
Question 2
Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system:
Activity Cost Pools
Activity Rate
Size-related
$0.94 per guest
Complexity-related
$31.62 per tier
Order-related
$55.70 per order
Data concerning two recent orders are listed here:
Pyburn Wedding
Smith Wedding
Number of reception guests
72
189
Number of tiers on the cake
4
5
Cost of purchased decorations for cake
$29.92
$68.75
Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall margin on the order?
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