1. Bridget Youhzi works for a large firm. Her alma mater has asked her to make a presentation to the upcoming accounting honor societys annual scholarship dinner. Her firm supports the presentation because it hopes to recruit more excellent employees like Bridget. The university is 194 miles from her office. In order to get to the dinner by 5:00 p.m., she will need to leave work at 1:00 p.m. She can drive her personal car and be reimbursed $0.50 per mile. The dinner ends at 9:00 p.m. Company policy allows her to spend the night if the return trip is four hours or more. There is a student-run inn and conference center across the street from campus that charges $100 per night.

Instead of driving, she could catch a 3:00 p.m. flight that has a round-trip fare of $290. Flying would require her to rent a car for $40 per day and pay an airport parking fee of $25 for the day. The company pays a per diem of $35 for incidentals if the employee spends at least six hours out of town. (The per diem would be for one 24-hour period for either flying or driving.) As a manager, Bridget is responsible for recruiting within a budget and wants to determine which is more economical.

Use the information provided to answer these questions.

A. What is the total amount of expenses Bridget would include on her expense report if she drives?

$___

B. What is the total amount of expenses she would include on her expense report if she flies?

$___

C. What is the relevant cost of driving?

$___

D. What is the relevant cost of flying?

$___

E. What is the differential cost of flying over driving?

$___

2. Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 28,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are:

Materials	$0.23 per roll
Labor	0.40 per roll
Variable overhead	0.15 per roll
Fixed overhead	0.20 per roll

A potential supplier has offered to sell Reuben the rolls for $0.88 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be?

Reuben would see a $___ (decline, increase) in profit if he buys the rolls.