1. Seidman Company manufactures and sells 34,000 units of product X per month. Each unit of product X sells for $15 and has a contribution margin of $6. If product X is discontinued, $75,000 in fixed monthly overhead costs would be eliminated and there would be no effect on the sales volume of Seidman Company's other products. If product X is discontinued, Seidman Company's monthly income before taxes should:

Multiple Choice

• Increase by $204,000.

• Decrease by $129,000.

• Decrease by $204,000.

• Increase by $129,000.

2. Express, Incorporated, is considering replacing equipment. The following data are available:

	Old Equipment	Replacement Equipment
Original cost	$ 53,000	$ 42,700
Disposal value now	$ 8,300	$ 0
Disposal value in 5 years	$ 0	$ 0
Annual cash operating costs	$ 9,300	$ 8,300

What are the total relevant costs of keeping the old equipment?

Multiple Choice

• $53,000.

• $8,300.

• $10,300.

• $46,500.

3. Wateredge Corporation has budgeted a total of $371,800 in costs and expenses for the upcoming quarter. Of this amount, $46,000 represents depreciation expense and $8,300 represents the expiration of prepayments. Wateredge's current payables balance is $275,000 at the beginning of the quarter. Budgeted payments on current payables for the quarter amount to $380,000. The company's estimated current payables balance at the end of the quarter is:

Multiple Choice

• $321,000.

• $212,500.

• $220,800.

• $266,800.

4. John Thomas is the manager of materials movement for the Syracuse plant of Carrier Corporation. Thomas should be evaluated as manager of:

Multiple Choice

• A cost center.

• An investment center.

• Human resources under his supervision.

• A profit center (other than an investment center).