30. Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, $157,000 of the fixed costs allocated to that division could be eliminated. The impact on Valbers operating income from eliminating the phone division would be:

	Desktops				Laptops				Tablets				Phones
Sales	$	377,000			$	892,500			$	715,000			$	982,000
Variable costs		208,000				642,000				535,000				802,000
Contribution margin		169,000				250,500				180,000				180,000
Fixed costs		78,200				181,300				145,800				202,000
Net income (loss)		90,800				69,200				34,200				(22,000	)

1. $12,000 decrease
2. $157,000 increase
3. $157,000 decrease
4. $22,000 increase
5. $23,000 decrease

31. Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $68,000 for the past year. Kitchen division sales for the year were $1,190,000, and its variable costs were $790,000. The fixed costs of the division were $336,000. If the kitchen division is dropped, 75% of the fixed costs allocated to it could be eliminated. The impact on Valdezs operating income from eliminating this business segment would be:

1. $148,000 decrease
2. $268,000 increase
3. $472,500 decrease
4. $148,000 increase
5. $268,000 decrease

32. Bricktan Inc. makes three products, basic, classic, and deluxe. The maximum Bricktan can sell is 120,000 units of basic, 492,000 units of classic, and 210,000 units of deluxe. Bricktan has limited production capacity of 126,000 hours. It can produce 10 units of basic, 8 units of classic, and 4 units of deluxe per hour. Contribution margin per unit is $15 for the basic, $25 for the classic, and $55 for the deluxe. What is the total contribution margin if Bricktan chooses the most profitable sales mix?

1. $13,975,500.
2. $11,316,000.
3. $18,204,000.
4. $25,650,000.
5. $15,006,000.Top of FormBottom of Form

Bottom of Form

35.

Bottom of Form

Graham Corp. has 1,000 cartons of oranges that were harvested at a cost of $30,000. The oranges can be sold as is for $35,760. The oranges can be processed further into orange juice at an additional cost of $12,950 and be sold at a price of $52,300. The net benefit (additional income) from processing the oranges into orange juice instead of selling as is would be:

1. $16,540.
2. $(16,540).
3. $(3,590).
4. $3,590.
5. $39,350.

36. Janko Wellspring Inc. has a pump with a book value of $35,000 and a 4-year remaining life. A new, more efficient pump, is available at a cost of $56,000. Janko can also receive $9,100 for trading in the old pump. The new pump will reduce variable costs by $13,100 per year over its four-year life. Should the pump be replaced?

1. Top of Form
2. Yes, because income will increase by $5,500 in total.
3. Yes, because income will increase by $5,500 per year.
4. No, because the company will be $5,500 worse off in total.
5. No, because income will decrease by $13,100 per year.
6. No, Janko will record a loss of $18,200 if they replace the pump.