1.During 2016, the Beach Restaurant had sales revenues and food costs of $800,000 and $600,000, respectively. During 2017, Beach plans to introduce a new menu item that is expected to increase sales revenues by $100,000 and food costs by $40,000. Assuming no changes are expected for the other food items, operating profits for 2017 are expected to increase by

a.) $260,000.

b.) $100,000.

c.) $60,000.

d.) $40,000.

2.In 2016, the TransUnion Company had consulting revenues of $1,000,000 while costs were $750,000. In 2017, TransUnion will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in costs. Assuming no changes are expected for the other services, operating profits are expected to increase between 2016 and 2017 by:

a.) $250,000.

b.) $150,000.

c.) $90,000.

d.) $60,000.

3.Geno's Body Shop had sales revenues and operating costs in 2016 of $650,000 and $525,000, respectively. In 2017, Geno's plans to expand the services it provides to customers to include detailing services. Revenues are expected to increase by $85,000 and operating costs by $50,000 as a result of this expansion. Assuming that there are no changes to the existing body shop business, what is the amount of operating profits that are expected be earned in 2017?

a.) $125,000

b.) $85,000

c.) $160,000

d.) $35,000

4.In 2016, the Allen Company had consulting revenues of $1,000,000 while operating costs were $750,000. In 2017, Allen will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in operating costs. Assuming no changes are expected for the other services, the differential revenue for 2017 will be

a.) $250,000.

b.) $150,000.

c.) $90,000.

d.) $60,000.

5.San Juan, Inc. is considering two alternatives: A and B. The costs associated with the alternatives are listed below:

	Alternative A				Alternative B
Material costs	$	35,000			$	57,000
Processing costs		36,000				57,000
Building costs		12,000				28,000
Equipment rental		19,000				19,000

If only the differential costs of the two decisions are considered, the total cost of Alternative B is

a.) $161,000.

b.) $131,500.

c.) $59,000.

d.) $102,000.

6.Two alternatives, identified X and Y, are under consideration at Hayden Corporation. Costs associated with the alternatives are listed below:

	Alternative X				Alternative Y
Material costs	$	44,000			$	56,000
Processing costs		37,000				59,000
Building costs		14,000				14,000
Equipment rental		11,000				11,000

What is the differential cost of Alternative Y over Alternative X?

a.) $140,000

b.) $123,000

c.) $34,000

d.) $106,000