1)

Sheffield Makeup produces face cream. Each bottle of face cream costs $11.10 to produce and can be sold for $13.20. The bottles can be sold as is, or processed further into sunscreen at a cost of $14.80 each. Sheffield Makeup could sell the sunscreen bottles for $23.70 each. What should Sheffield Makeup do?

Face cream must be further processed because its profit is $8.90 each.

Face cream must not be further processed because costs increase more than revenue.

Face cream must not be further processed because it decreases profit by $2.20 each.

Face cream must be further processed because it increases profit by $2.10 each.

2)

Bramble Industries can produce 500 units of a necessary component part with the following costs:

Direct Materials	$75800
Direct Labour	20700
Variable Overhead	59100
Fixed Overhead	9000

If Bramble Industries purchases the component externally, $3400 of the fixed costs can be avoided. Below what external price for the 500 units would Bramble choose to buy instead of make?

$96500

$164600

$155600

$159000