1. Party Supply is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supplys business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated, but will be allocated to the two remaining segments.

	Costumes		Party Supplies		Floral Decorations
Sales	$159,000		$110,000		$211,000
Variable costs	84,000		51,000		119,000
Contribution margin	$75,000		$59,000		$92,000
Direct fixed costs	50,000		21,000		24,000
Allocated common fixed costs	30,000		24,000		29,000
Net income	$(5,000)		$14,000		$39,000

If costumes are dropped, what change will occur to profit?

Profit will (increase, decrease) by $___

2. Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $479,160 and will generate $120,000 per year for 5 years. Calculate the IRR for this piece of equipment.

___%

3. Underground Food Store has 3,000 pounds of raw beef nearing its expiration date. Each pound has a cost of $4.50. The beef could be sold "as is" for $3.00 per pound to the dog food processing plant, or roasted and sold in the deli. The cost of roasting the beef will be $2.80 per pound, and each pound could be sold for $6.50. What should be done with the beef, and why? If required, round final answers to two decimal places.

The beef (should be, should not be) processed further since the sales price (increase, decrease) by $fill in the blank 3 per pound and the cost only (increase, decrease) by $___ per pound.