1a. Ooo-La-La Company has met all production requirements for the current month and has an opportunity to manufacture additional units with its excess capacity. Unit selling prices and unit costs for three product lines follow.

	Plain				Regular				Super
Selling price	$	140			$	157			$	165
Direct material		32				36				42
Direct labor (at $10 per hour)		20				25				25
Variable overhead		28				32				36
Fixed overhead		26				27				28

Variable overhead is applied on the basis of direct labor dollars, whereas fixed overhead is applied on the basis of machine hours. There is sufficient demand for the additional manufacture of all products. 1A. If Ooo-La-La has excess machine capacity and can add more labor as needed (i.e., neither machine capacity nor labor is a constraint), which product is the most attractive to produce?

1B. If Ooo-La-La has excess machine capacity but a limited amount of labor time available, which product or products should be manufactured in the excess capacity?

1c. Cornerstone, Inc. has $130,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $42,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $28,000. There the goods could be sold for $85,000. What alternative is more desirable and what is the relevant cost for that alternative?

1d. The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity:

Sales revenue	$	360,000
Variable costs:
Cost of goods sold		285,000
Sales commissions		35,000
Fixed operating costs		95,000

If 80% of the fixed operating costs are avoidable, should the Boot Department be closed?