1)Lattimer Company had the following results of operations for the past year:

Sales (15,000 units at $11.85)		$177,750
Variable manufacturing costs	$95,250
Fixed manufacturing costs	18,750
Selling and administrative expenses (all fixed)	33,750	(147,750)
Operating income		$30,000

A foreign company whose sales will not affect Lattimer's market offers to buy 4,700 units at $7.20 per unit. In addition to existing costs, selling these units would add a $0.22 selling cost for export fees. If Lattimer accepts this additional business, the special order will yield a:

$3,995 profit.

$1,880 loss.

$7,614 loss.

$2,961 profit.

$2,914 loss.

2) Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $3,700. The division sales for the year were $1,057,000 and the variable costs were $867,000. The fixed costs of the division were $200,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be: $190,000 decrease $60,000 decrease $56,300 decrease $130,000 decrease $190,000 increase