3. Boyer Company manufactures basketballs. The forecasted income statement for the year before any special orders is as follows: Amount Per Unit Sales (400,000 units) $4,000,000 $10.00 Manufacturing CGS Variable Fixed Gross profit Selling expenses Variable Fixed Operating Income (2,000,000) (5.00) (1,200,000) (3.00) $ 800,000 $2.00 (200,000) (.50) (100,000) (.25) $ 500,000 $1.25 Fixed costs included in the above forecasted income statement are $1,200,000 in manufacturing CGS and $100,000 in selling expenses. Boyer received a special order offering to buy 50,000 basketballs for $8.00 each. No additional selling expenses will be incurred if Boyer accepts. Assume Boyer has sufficient capacity to manufacture 50,000 more basketballs. By what amount will operating income change as a result of accepting the special order. a. $25,000 decrease b. $62,500 decrease c. $100,000 increase d. $125,000 increase e. $150,000 increase 4. Products A, B, C, and D have contribution margins of $2.00, $3.00, $4.00, and $5.00, respectively, and require 1.5, 2, 2.5, and 3 machine hours per unit, respectively. Assuming that all units produced could be sold and that total machine hours per month are limited, on which product should the company concentrate its efforts? a. A b. B c. C d. D 5. The sell or process-further decision considers a. Costs incurred before split-off b. Costs incurred after split-off c. Joint costs incurred before split-off d. All costs incurred 6. As a general rule, a segment should not be eliminated if a. The company is profitable b. The segment's fixed costs equal its variable costs c. Its contribution margin exceeds avoidable fixed costs d. Its avoidable fixed costs exceed its contribution margin