(1) A company expects to produce and sell a single product. Management desires a 14% return on assets of $725,000. The following additional company information is available:

Variable costs (per unit)

Production costs $58

Nonproduction costs $11

Fixed costs (in total)

Overhead $179,872

Nonproduction $49,984

What is the selling price per unit, assuming the company produced and sold 17,600 units?

Group of answer choices

None of the answers are the correct selling price.

$82.06

$87.83

$79.50

$89.25

(2) Orange Company has 10,000 units of its sole product that it produced last year at a cost of $50 each. This years model is superior to last years and the 10,000 units cannot be sold for their regular selling price of $75 each. Orange has two alternatives for these items:

(1) they can be sold to a wholesaler for $5 each, or

(2) they can be reworked at a total cost of $190,000 and then sold for $22.50 each.

The company has enough idle capacity to rework these items without affecting any new production. Which choice would increase the companys profits the most?

Group of answer choices

Scrapping, because profit will increase by $50,000 more than reworking.

Reworking, because profit will increase by $15,000 more than scrapping.

Reworking because profit will increase by $50,000 more than scrapping.

Reworking, because profit will increase by $35,000 more than scrapping.

Scrapping, because profit will increase by $15,000 more than reworking.