1. Cornerstone, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods c be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods couldb sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative? A. Sell "as is," $125,000. B. Clean and ship to outlet center, $23,000. C. Clean and ship to outlet center, $103,000. D. Clean and ship to outlet center, $148,000. E. Neither alternative is desirable, as both produce a loss for the firm. 2. Two months ago, Air-tite Corporation purchased 4,500 pounds of Hydrol, paying $15,300. The demand for this product has been very strong since the acquisition, with the market price jumping to $4.05 per pound. (Air-tite can buy or sell Hydrol at this price.) The company recently received a special-order inquiry, one that would require the use of 4,200 pounds of Hydrol. Which of the following is (are) relevant in deciding whether to accept the special order? A. The 300-pound remaining inventory of Hydrol. B. The $4.05 market price. C. The $3.40 purchase price. D. 4,500 pounds of Hydrol. E. Two or more of the other factors are relevant. 3. Elkhorn, Inc., which has excess capacity, received a special order for 4,000 units at a price of $15 per unit. Currently, production and sales are anticipated to be 10,000 units without considering the special order. Budget information for the current year follows. $190,000 145,000 $ 45.000 Sales Less: Cost of Goods Sold Gross Margin Cost of goods sold includes $30,000 of fix the company's income will: ed manufacturing cost. If the special order is accepted, A. increase by $2,000 B. decrease by $2,000 C. increase by $14,000 D. decrease by $14,000. E. None of the answers is correct