1. The purchase cost is $58 per unit (part) plus a 5% import tariff (tax) based on the sales price plus $3 per unit for shipping. If I make the part in my own factory, the total cost per unit will be $52 including $8 per unit for fixed factory depreciation expense. 40,000 of the parts are normally purchased during the year. Now the parts can be manufactured by me using unused capacity with no increase or decrease in fixed costs. What is the total increase or decrease in my net income from making the part rather than purchasing it.

10. Perry Co. is considering disposing of a truck (asset). Perry can sell the truck through a broker for $95,000 less a 6% broker commission. Alternatively, Collie Corp. has offered to lease the truck for five years for a total of $100,000. If the truck is leased to Collie, Terrier will incur maintenance, insurance, and license expenses estimated at $12,000 over the five-year lease period. At lease-end, the truck is expected to have no residual value. What is the increase or decrease in net income for 5 years if the truck is leased to Collie rather than selling it.

11. Mount Co. is considering disposing of an old machine (asset) that had an original cost $680,000. Straight-line depreciation expense for the machine is $68,000 per year, and it has an estimated remaining useful life of five years. The old machine can be sold for $82,500. A new machine with a purchase price of $678,000 is being considered as a replacement. It will have a useful life of five years and no residual value. Estimated annual variable manufacturing costs will be reduced from $220,000 to $87,000 if the new machine is acquired. Whats the increase or decrease in Poltavas net income for the entire five years if the new machine is acquired.

2. During a typical week, ShopIt sells 2,200 pounds of a food item unprepared (raw) for $4.99 per pound. The variable cost of the unprepared (raw) product is $2.40 per pound. ShopIt is considering whether to cook the product and sell it in its deli department for $11.99 per pound. The variable cost to cook the 2,200 pounds of food in the deli is $5,856 total. Fixed costs are not affected. If ShopIt cooks the raw product it will lose 10% of the product per week in the preparation process.

a) Calculate the increase or decrease in ShopIt's net income if it cooks the product and sells it in the deli for $11.99 per pound.

b) Calculate the cooked (prepared) food price per pound that would eliminate any advantage for selling the cooked product in the deli.