1. Wehrs Corporation has received a request for a special order of 9,100 units of product K19 for $46.60 each. The normal selling price of this product is $51.70 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows:

Direct materials	$	17.40
Direct labor		6.70
Variable manufacturing overhead		3.90
Fixed manufacturing overhead		6.80
Unit product cost	$	34.80

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 some modifications made to product K19 that would increase the variable costs by $6.30 per unit and that would require a one-time investment of $46,100 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.

Required:

Determine the effect on the company's total net operating income of accepting the special order.

2. Swagger Corporation purchases potatoes from farmers. The potatoes are then peeled, producing two intermediate products-peels and depeeled spuds. The peels can then be processed further to make a cocktail of organic nutrients. And the depeeled spuds can be processed further to make frozen french fries. A batch of potatoes costs $48 to buy from farmers and $14 to peel in the company's plant. The peels produced from a batch can be sold as is for animal feed for $30 or processed further for $19 to make the cocktail of nutrients that are sold for $50. The depeeled spuds can be sold as is for $41 or processed further for $30 to make frozen french fries that are sold for $62.

Required:

a. Assuming that no other costs are involved in processing potatoes or in selling products, how much money does the company make from processing one batch of potatoes into the cocktail of organic nutrients and frozen french fries?

b. Should each of the intermediate products, peels and depeeled spuds, be sold as is or processed further into an end product?

3. Foto Company makes 17,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:

Direct materials	$	13.90
Direct labor		21.50
Variable manufacturing overhead		3.70
Fixed manufacturing overhead		11.60
Unit product cost	$	50.70

An outside supplier has offered to sell the company all of these parts it needs for $43.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $18,700 per year.

If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $5.70 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.

Required:

a. How much of the unit product cost of $50.70 is relevant in the decision of whether to make or buy the part? (Round "Per Unit" to 2 decimal places.)

b. What is the financial advantage (disadvantage) of purchasing the part rather than making it?

c. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 17,000 units required each year? (Round "Per Unit" to 2 decimal places.)

I will rate this as good if you answer these three easy questions. I really need them! Thanks