1.Joe, Jeff and Jerry Frank own Frank Brothers Farm, a seed company specializing in seed corn. At their weekly meeting they tried to calculate the portion of the farm's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of bushels of seed corn that has been sold reached its peak in May, when the total monthly overhead costs totaled $250,000 for 95,000 bushels of seed corn sold. The lowest number of bushels sold in the last twelve months occurred in December, when total overhead costs were $75,000 for 7,500 bushels sold. What was the variable cost per yard?

A.$2.00

B.$0.50

C.$2.63

D.$10.00

2.Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow:

	Total	Hiking	Fashion
Sales revenue	$480,000	$340,000	$140,000
Variable expenses	355,000	235,000	120,000
Contribution margin	125,000	105,000	20,000
Fixed expenses	76,000	38,000	38,000
Operating income (loss)	$49,000	$67,000	$(18,000)

Assuming fixed costs remain unchanged, how would discontinuing the Fashion line affect operating income?

A.Decrease in total operating income of $78,000

B.Decrease in total operating income of $20,000

C.Increase in total operating income of $29,000

D.Increase in total operating income of $132,000

3.Stooge Enterprises manufactures ceiling fans that normally sell for $90 each. There are 300 defective fans in inventory, which cost $55 each to manufacture. These defective units can be sold as is for $20 each, or they can be processed further for a cost of $40 each and then sold for the normal selling price. Stooge Enterprises would be better off by a

A.$9,000 net increase in operating income if the ceiling fans are repaired.

B.$9,000 net increase in operating income if the ceiling fans are sold as is.

C.$21,000 net increase in operating income if the ceiling fans are repaired.

D.$21,000 net increase in operating income if the ceiling fans are sold as is.