1. Naylor Corporation produces multiple products. Financial information for Product A is included below.

	Product A
Revenue	$ 190,000
Variable expenses	45,000
Contribution margin	145,000
Traceable fixed costs	70,000
Allocated common fixed costs	80,000
Net operating income	$ (5,000)

Based on this information, Product A should be discontinued. True or False?

2. The difference between actual quantity of input at actual price and actual quantity of input at standard price is know as _______.

	A.	spending variance
	B.	output variance
	C.	quantity variance
	D	price variance

3. If a company produces some "seconds" that cannot be sold at the normal price through regular distribution channels, which of the following is/are relevant for setting a minimum selling price?

	A.	Fixed manufacturing overhead
	B.	Variable manufacturing overhead
	C.	Variable selling expenses
	D.	Fixed selling expenses
	E.	Direct material
	F.	Direct labor

4. An unfavorable materials quantity variance could result from:

Select all that apply.

	A.	untrained workers
	B.	inferior materials quality
	C.	faulty machines
	D.	unreliable suppliers
	E.	large order size to take advantage of price discounts