1.

The Cabinet Shoppe is considering the addition of a new line of kitchen cabinets to its current product lines. Expected cost and revenue data for the new cabinets are as follows:

Annual sales	5,100 units
Selling price per unit	$185
Variable costs per unit:
Production	$121
Selling	$16
Avoidable fixed costs per year:
Production	$41,000
Selling	$61,000
Allocated common fixed costs per year	$45,100

If the new cabinets are added, it is expected that the contribution margin of other product lines at the cabinet shop will drop by $20,200 per year. If the new cabinet product line is added next year, the increase in net operating income resulting from this decision would be:

$97,700

$244,800

$142,800

$122,600

2. Stuchlik Catering uses two measures of activity, jobs and meals, in the cost formulas in its flexible budgets. The cost formula for catering supplies is $640 per month plus $84 per job plus $20 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in January to be 49 jobs and 230 meals, but the actual activity was 50 jobs and 235 meals. The actual cost for catering supplies in January was $7,600. The catering supplies in the planning budget for January would be closest to:

$7,600

$9,440

$9,356

$9,540

Eckels Wares is a division of a major corporation. The following data are for the latest year of operations:

Sales		$	33,400,000
Net operating income		$	1,903,800
Average operating assets		$	8,350,000
The company's minimum required rate of return			12	%

Required:
a.	What is the division's margin? (Round your answer to 2 decimal places.)

Margin

%

b.	What is the division's turnover? (Round your answer to 2 decimal places.)

Turnover

times

c.	What is the division's return on investment (ROI)? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Return on investment

%

d.	What is the division's residual income?

Residual income

$