1) Assume that Jawal Co. has sufficient capacity to produce 105,300 Phonos each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 55% above the present 80000 units each year if it were willing to increase the fixed selling expenses by $180,000. Calculate the incremental net operating income.

2) Assume again that Jawal Co. has sufficient capacity to produce 105,300 Phonos each year. A customer in a foreign market wants to purchase 27,300 Phonos. Import duties on the Phonos would be $3.70 per unit, and costs for permits and licenses would be $21,840. The only selling costs that would be associated with the order would be $1.80 per unit shipping cost. Compute the per unit break-even price on this order.

3) Due to a strike in its suppliers plant, Jawal Co. is unable to purchase more material for the production of Phonos. The strike is expected to last for two months. Jawal Co. has enough material on hand to operate at 20% of normal levels for the two-month period. As an alternative, Jawal Co.could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 45% of their normal level during the two-month period and the fixed selling expenses would be reduced by 30%. What would be the impact on profits of closing the plant for the two-month period? (Enter losses/reductions with a minus sign) - Show both long & short solutions (14 points) - SHOULD THE COMPANY SELL FOR 2 MONTHS OR CLOSE DOWN?

4) An outside manufacturer has offered to produce Phonos and ship them directly to Jawal customers. If Jawal Co. accepts this offer, the facilities that it uses to produce Phonos would be idle; however, fixed manufacturing overhead costs would be reduced by 50%. Because the outside manufacturer would pay for all shipping costs, the variable selling expenses would be only three-fourth of their present amount. Compute the unit cost that is relevant for comparison to the price quoted by the outside manufacturer.

Jawal Co. has a single product called a Phono. The company normally produces and sells 80000 Phonos each year at a selling price of $50 per unit. The company's units production, selling price, costs at this level of activity are given below: Value 80000 50.00 5.60 Description Unit $ Production Level Phono Units Selling Price Direct materials $L Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses $ Fixed selling expenses $ Total cost per unit $ 11.00 3.40 19 49 49 CACACACAO 7.00 4.50 4.70 36.20