1. Speed Quest Inc, manufactures speed boats. Currently, the company manufactures its own engine for the boats at the following unit costs: Direct materials Direct labor Variable overhead Fixed overhead $25.00 $40.00 $15.00 $20.00 Another manufacturer has offered to supply Speed Quest with the engine at a cost of $85 each. Speed Quest currently makes 1,000 boats annually. Required: (1) Unit cost to make the boat: (2) Unit cost to buy the boat: (3) To make or to buy? (4) If Speed Quest accepts the offer, what will be the short-term impact on net income? 2. Tremaine Inc. has three product lines: A, B, and C. Sales Variable costs Contribution margin Fixed costs Net income 555.000 37.000 18.000 23,000 S(5.000) $90,000 40.000 50.000 20.000 $30,000 $95,000 45.000 50.000 30.000 $20.000 Total $240.000 122.000 118,000 73.000 $ 45.000 Management is considering dropping product line A. If it is discontinued, $14,000 of its fixed costs can be avoided. The discontinuation of product line A would: a. decrease net income by $15,000. b. increase net income by $21,000. c. decrease net income by $4,000. d. increase net income by $4,000