1. The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses:

	East			West
Sales	$	603,000		$	506,000
Variable costs		231,000			300,000
Traceable fixed costs		151,500			192,000
Allocated common corporate costs		128,600			156,000
Net operating income (loss)	$	91,900		$	(142,000	)

The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:

2.

Part U16 is used by Mcvean Corporation to make one of its products. A total of 18,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity:

	Per Unit
Direct materials	$	3.90
Direct labor	$	8.50
Variable manufacturing overhead	$	9.00
Supervisor's salary	$	4.40
Depreciation of special equipment	$	2.80
Allocated general overhead	$	8.00

An outside supplier has offered to make the part and sell it to the company for $28.70 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part U16 could be used to make more of one of the company's other products, generating an additional segment margin of $30,000 per year for that product. The annual financial advantage (disadvantage) for the company as a result of buying part U16 from the outside supplier should be:

3.

A customer has requested that Lewelling Corporation fill a special order for 2,800 units of product S47 for $33 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $23.30:

Direct materials	$	6.40
Direct labor		5.00
Variable manufacturing overhead		3.50
Fixed manufacturing overhead		8.40
Unit product cost	$	23.30

Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $2.00 per unit and that would require an investment of $18,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

4.

The constraint at Rauchwerger Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

	WX		KD		FS
Selling price per unit	$	335.02	$	228.30	$	199.05
Variable cost per unit	$	259.58	$	173.40	$	159.93
Minutes on the constraint		5.90		4.20		3.90

Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? (Round your intermediate calculations to 2 decimal places.)

5.

Two products, QI and VH, emerge from a joint process. Product QI has been allocated $31,300 of the total joint costs of $52,000. A total of 2,600 units of product QI are produced from the joint process. Product QI can be sold at the split-off point for $15 per unit, or it can be processed further for an additional total cost of $10,600 and then sold for $17 per unit. If product QI is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point?

6.

Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 46,000 units per month is as follows:

	Per Unit
Direct materials	$	45.60
Direct labor	$	8.70
Variable manufacturing overhead	$	1.70
Fixed manufacturing overhead	$	18.50
Variable selling & administrative expense	$	3.00
Fixed selling & administrative expense	$	14.00

The normal selling price of the product is $98.10 per unit.

An order has been received from an overseas customer for 2,600 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.80 less per unit on this order than on normal sales.

Direct labor is a variable cost in this company.

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $82.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be: