1. Alard Manufacturing Company has a billing department staffed by four billing clerks. Each clerk is paid $32,000 per year and is able to process 8,000 bills. Last year, 27,360 bills were processed by the four agents. Calculate the unused capacity in terms of number of bills.

a. 27,360

b. 4,640

c. 8,000

d. 32,000

2. Refer to 3.27. What if one of the billing clerks agreed to work half time for $16,000? What would unused capacity be in bills?

a. zero

b. 4,640

c. 28,000

d. 640

3. A decrease in production levels within a relevant range most likely would result in:

a. decreasing the total cost.

b. increasing the variable cost per unit.

c. increasing the total fixed cost.

d. decreasing the variable cost per unit.

4. Natur-Gro, Inc., manufactures composters. Based on past experience, Natur-Gro has found that its total annual overhead costs can be represented by the following formula: Overhead cost = $264,000 + $1.42X, where X equals number of composters. Last year, Natur-Gro produced 30,000 composters. Actual overhead costs for the year were as expected. Total overhead for per unit was

a. $1.42

b. $8.80

c. $11.63

d. $10.22