1)

Orioles Fish House can produce and sell only one of the following two products:

	Fryer Hours Required	Contribution Margin Per Unit
Fried catfish	4	$14
Fried grouper	5	$15

The company has fryer capacity of 12200 hours. How much will the contribution margin be if it produces only the most profitable product?

$61000

$48800

$42700

$12200

2)

Bonita Company manufactures widgets. Carla Vista Company has approached Bonita with a proposal to sell the company widgets at a price of $59600 for 100,000 units. Bonita is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced:

Direct material	$22000
Direct labour	22800
Manufacturing overhead	30200
Total	$75000

The manufacturing overhead consists of $12200 of costs that will be eliminated if the components are no longer produced by Bonita. From Bonitas point of view, how much is the incremental cost or savings if the widgets are bought instead of made?

$15400 incremental savings

$2600 incremental cost

$2600 incremental savings

$15400 incremental cost