7. Assume a company makes only three products, A, B, and C:

	Product A	Product B	Product C
Estimated customer demand in units	700	600	800
Selling price per unit	$ 80	$ 65	$ 45
Variable cost per unit	$ 35	$ 26	$ 20
Machine-hours per unit	2.5	3.0	1.25

The company has only 3,050 machine-hours available. Up to how much should the company being to pay per hour to lease additional machine capacity?

• $18

• $20

• $15

• $13

8. Assume a company purchases honeycombs from beekeepers for $2.00 a pound. The honey can be sold in raw form for $3.20 a pound or it can be used to make honey drop candies. Each package of candies contains three-quarters of a pound of honey and can be sold for $4.40. In addition to the cost of the honey, making and selling each container of candies incurs additional variable costs of $1.10 per unit. The monthly fixed costs associated with making the candies include:

Master candy-makers salary	$ 3,900
Depreciation of candy-making equipment	400
Salary of salesperson dedicated to this product	2,000
Total fixed costs	$ 6,300

The candy-making equipment does not wear out through use and it has no resale value. Assuming the company makes and sells 8,000 containers of candy, what is the financial advantage (disadvantage) of continuing to process raw honey into candies?

• $(5,500)

• $(5,100)

• $1,300

• $900