$1.$ Tara$$s Treasures operates $3$ departments: Men$$s Women$$s & Accessories

MEN$$s Women$$s Accessories Total

Sales Revenue $$105,000$ $$54,000$ $$100,000$ $$259,000$

Variable Costs $$60,000$ $$30,000$ $$80,000$ $$170,000$

Fixed Costs $$25,000$ $$20,000$ $$25,000$ $$70,000$

Total Expenses $$85,000$ $$50,000$ $$105,000$ $$240,000$

Operating Inc$/$Loss $$20,000$ $$4,000($$$5,000)$ $$19,000$

Tara is trying to decide if she should DROP$/$CLOSE the Accessories Department....

The $$70,000$ FIXED Costs would need to be allocated $2/3$s to MEN$$s and $1/3$ to Women$$s$...$

Should she close ACCESSORIES??

$2.$ Gillian$$s Gems has an INVENTORY of old Jewelry of $500$ units that has a COST of $$80,000.....$Gillian has a decision to make...and asks you for your advice....

a$.$ Should she invest an additional $$20,000$ in the units....and then sell them for $$28,000?$

b$.$ Should she sell the $500$ Units $$as is$$ for $$6,000?$

What advice would you give her and why.

$3.$ A new customer approaches your company with a SPECIAL ORDER: They would like to purchase $50,000$ cookies for $$\mathrm{.}40($CENTS$)$ per Cookie....the Cookies cost $$\mathrm{.}60($Cents$)$ to make:

Variable Costs:

Direct Materials $$\mathrm{.}14$

Direct Labor $$\mathrm{.}08$

Manufacturing Overhead $$\mathrm{.}13$

Fixed Costs $$\mathrm{.}25$

Total Costs $$\mathrm{.}60$

Should the Special Order be Accepted...or Rejected and WHY?

$4.$ Tara$$s Treasures currently manufactures her product for $$20$ per unit:

Variable Costs $$16$

Fixed Costs $$4$

Total $$20$

Tara is approached by a supplier who offers to make her product for $$17$ per unit, Should Tara agree assuming she cannot eliminate any of the Fixed Costs?

If Tara can eliminate $$2$ of the Fixed Costs, should she now accept the offer to have her inventory made by another company instead of making the product herself?