$1.$ Gillian$$s Gems has an INVENTORY of old Jewelry of $500$ units that has a COST of $$50,000.....$Gillian has a decision to make...and asks you for your advice....

a$.$ Should she invest an additional $$25,000$ in the units....and then sell them for $$30,000?$

b$.$ Should she sell the $500$ Units $$as is$$ for $$8,000?$

What advice would you give her and why.

$2.$ A new customer approaches your company with a SPECIAL ORDER: They would like to purchase $100,000$ cookies for $$\mathrm{.}48($CENTS$)$ per Cookie....the Cookies cost $$\mathrm{.}80($Cents$)$ to make and usually sell for $$1\mathrm{.}20$ per Cookie:

Variable Costs:

Direct Materials $$\mathrm{.}20$

Direct Labor $$\mathrm{.}10$

Manufacturing Overhead $$\mathrm{.}15$

Fixed Costs $$\mathrm{.}35$

Total Costs $$\mathrm{.}80$

Should the Special Order be Accepted...assuming they have excess capacity...and the current customers will not be made aware of the Special Order Price.......or Rejected and WHY?

Tara$$s Treasures currently manufactures her product for $$30$ per unit:

Variable Costs $$22$

Fixed Costs $$8$

Total $$30$

Tara is approached by a supplier who offers to make her product for $$25$ per unit, Should Tara agree assuming she cannot eliminate any of the Fixed Costs?

If Tara can eliminate $$6$ of the Fixed Costs, should she now accept the offer to have her inventory made by another company instead of making the product herself?