1.SurplusTyre Company produces and sells 40,000tyres per month. The normal sales price is $30 per tyre. The costs to produce one tyre are $4 of direct materials, $3 of direct labor, $8 of variable overhead, and $2 of fixed overhead. A special order for 1,000 tyre at $15 each has been received. Assuming fixed overhead costs will not increase and present sales will not be affected, the profit increase or decrease from accepting this special order is:

Select one:

a.A $2,000 decrease.

b.A $2,000 increase.

c.$0.

d.An $8,000 increase.

2.A college student has two potential job offers upon graduation. Job choice #1 pays $48,000 per year. Job choice #2 pays $45,000 per year. Should the student choose job #1, the opportunity cost is $45,000.

Select one:

a.True

b.False

3.A net loss of $60,000 was reported for Product X of the Round Manufacturing Company for the past year. This loss was computed as follows: Sales $300,000Variable Costs (120,000) Fixed Costs (240,000) Net Loss $(60,000) Because of the loss, Round is considering discontinuing Product X. The Cost Accounting Department estimates that 60% of Product X's fixed costs are avoidable and 40% are unavoidable. If Product X is discontinued, how will Round's total profit change?

Select one:

a.Increase by $24,000

b.Decrease by $36,000

c.Increase by $60,000

d.Decrease by $60,000

4.Consider the following information and answer the question below.

Selling

Direct Labour

Advertising

Machinery

Sales

price

cost

cost

costs

Product X

12,000 units

$5 per unit

$3 per unit

$400

$5000

Product Y

16,000 units

$4 per unit

$3.50 per unit

$200

$6200

Which of the following is true? Product X:

Select one:

a.contributes more to profit than Product Y.

b.has higher variable costs than Product Y.

c.produces lower profits than Product Y.

d.has higher fixed costs that Product Y.