1. The Clear Music Company produces and sells a desktop speaker for $300. The company has the capacity to produce 70,000 speakers each period. At capacity, the costs assigned to each unit are as follows:

Unit level costs	$145
Product level costs	$35
Facility level costs	$25

The company has received a special order for 21,000 speakers. If this order is accepted, the company will have to spend $30,000 on additional costs. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order? (Do not round your intermediate calculations. Round your final answer to two decimal places.)

$146.43

$196.43

$153.93

$156.93

2. Gleam Clean cleans and waxes floors for commercial customers. The company is presently operating at less than capacity with equipment and employees idle at times. The company recently received an order from a potential customer outside the company's normal geographic service region for a price of $17,000. The size of the proposed job is 30,000 square feet. The company's normal service costs are as follows:

Unit-level materials		$0.26 per square foot
Unit-level labor		$0.33 per square foot
Unit-level variable overhead		$0.16 per square foot
Facility-level overhead		Allocated at $0.18 per square foot

If the company accepts the special offer:

A. The company will lose $10,900 on the job.

B. The company will earn $9,200 on the job.

C. The company will lose $5,500 on the job.

D. The company will lose $700 on the job.

3. Trail Power has been using the same machines to make its name brand clothing for the last 5 years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company $420,000. The old machines presently have a book value of $142,000 and a market value of $34,000. They are expected to have a 5 year remaining life and zero salvage value. The new machines would cost the company $320,000 and have operating expenses of $19,000 a year. The new machines are expected to have a 5 year useful life and no salvage value. The operating expenses associated with the old machines are $52,000 a year. The new machines are expected to increase quality, justifying a price increase, and thereby increasing sales revenue by $32,000 a year. Select the true statement.

A. The company will be $39,000 better off over the 5 year period if it replaces the old equipment.

B. The company will be $84,000 better off over the 5 year period if it keeps the old equipment.

C. The company will be $50,000 better off over the 5 year period if it keeps the old equipment.

D. The company will be $34,000 better off over the 5 year period if it replaces the old equipment.

4. Lucinda purchased a raffle ticket for $21. Just before the grand prize drawing two people tried to buy her ticket. The first person offered $90, and another offered $125. What is Lucinda's opportunity cost of keeping the raffle ticket?

5. Breezy Company is disposing of equipment that was originally purchased for $450,000 and has $135,000 of accumulated depreciation to date. The same equipment would cost $570,000 to replace. What is the total amount of sunk cost?

A. $135,000

B. $570,000

C. $450,000

D. $315,000