As of 12/31/03, an insurance company has a known obligation to pay $1,000,000 on 12/31/2007. To fund this liability, the company immediately purchases 4-year 5% annual

coupon bonds totaling $822,703 of par value. The company anticipates reinvestment interest

rates to remain constant at 5% through 12/31/07. The maturity value of the bond equals

the par value. Under the following reinvestment interest rate movement scenarios effective

1/1/2004, what best describes the insurance companys profit or (loss) as of 12/31/2007 after

the liability is paid?

(a) Interest rates drop by 1/2%

(b) Interest rates increase by 1/2%

Doogan corporation makes a product with the following standard costs: standard quantity or hours standard price or rate direct materials 2.0 grams $ 7.00 per gram direct labor 1.6 hours $ 12.00 per hour variable overhead 1.6 hours $ 6.00 per hour the company produced 5,000 units in january using 10,340 grams of direct material and 2,320 direct labor-hours. during the month, the company purchased 10,910 grams of the direct material at $7.30 per gram. the actual direct labor rate was $12.85 per hour and the actual variable overhead rate was $5.80 per hour. the company applies variable overhead on the basis of direct labor-hours. the direct materials purchases variance is computed when the materials are purchased. the materials quantity variance for january is: