1. Hungry Bunny Company provide two services to its customers, Dine-in and Drive Thru. The company is considering dropping its Drive Thru service. Dropping Drive Thru service is expecte increase the revenue for Dine-in service 45% as a result, allow the company to eliminate the drive-thru window rental now costing $75 per month and save the company the salary of the staf working on the drive thru of $500 per month. Hungry Bunny's other fixed overhead costs will be the same under any alternative. The company records show the following budgeted income statement for the two services as follows: Dine-in Drive Thru Total Revenue $25,000 $ 20,000 $45,000 Direct materials 6,250 5,000 11,250 Direct labor 5,000 3,000 8,000 Drive Thru Window rental 750 6,500 7,250 Other overhead costs 2,500 5,250 7,750 Operating income $10,200 $ 250 $10,750 Required: Should Hungry Bunny Company drop its drive-thru service? Explain your answer using incremental relevant information analysis. (8 marks) 2. Barka Leather Company is considering purchasing leather materials for the coming year to use in its production from two suppliers: MajanCo. and Rawabi Dhofar Company. Each supplier provided the following information: MajanCo. offers sales of six batches over the year of 5000 units of input per batch for a price of $5/unit. Rawabi Dhofar Company offers a monthly batch sale over the year of 2,500 units of input per month for a price of $5.25 per unit. Each batch purchase order will cost Barka $90 per batch and purchases will be used uniformly during the year. The annual rate of return for cash invested with the same risk as investment i inventory is 11%. a. Analyze the two offers using the opportunity cost approach and comment on which offer should be accepted by Barka Leather Company. (7 marks) b. What other costs related to inventory holding should be considered as well? (1 marks) 3. Explain with an example why managers find it difficult to adopt a decision alternative even when the relevance cost analysis shows the superiority of this decision alternative to maximize operating income over other decision alternatives. What might the company do to reduce the pressure on management and decrease the ethical conflict