1.) AV, Inc. has 126,000 direct labor hours available per year. Information related to AV's three products appears below: Product #1 Product #2 Product #3

demand for next year in units .... 63,000 55,000 78,000

selling price per unit ........... $24 $46 $28

variable costs per unit .......... $15 $34 $21 direct labor hours needed to produce one unit ............... 1.25 1.60 0.80 Calculate the number of units of Product #2 that AV, Inc. should produce next year in order to maximize its net income.

2.) Jump Company currently produces 12,000 units per year of a component part of its products. The cost per unit of this component part is given below: direct materials ................. $16

direct labor ..................... $12

variable overhead ................ $ 7

allocated fixed overhead ......... $ 9

total ............................ $44 An outside supplier has offered to sell Jump Company 12,000 units of this component part for $38 per unit. Accepting the offer will allow Jump Company to devote more resources to the production of a product that is in high demand. This will let Jump Company earn additional contribution margin of $63,000 per year. Calculate the amount of the increase in company profits if Jump Company accepts the outside suppliers offer.