8) Data concerning Hochul Corporation's single product appear below:

	Per Unit	Percent of Sales
Selling price	$ 100	100%
Variable expenses	44	44%
Contribution margin	$ 56	56%

Fixed expenses are $440,000 per month. The company is currently selling 8,000 units per month. Required: a)The marketing manager believes that an $18,000 increase in the monthly advertising budget would result in a 160 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

b)How will this proposed change affect the contribution margin ratio ?

9) Molinaro Corporation has provided the following data for its two most recent years of operation:

Selling price per unit	$ 80
Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials	$ 13
Direct labor	$ 5
Variable manufacturing overhead	$ 3
Fixed manufacturing overhead per year	$ 200,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold	$ 4
Fixed selling and administrative expense per year	$ 75,000

	Year 1	Year 2
Units in beginning inventory	0	1,000
Units produced during the year	8,000	7,000
Units sold during the year	7,000	5,000
Units in ending inventory	1,000	3,000

Required: a. Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses absorption costing. Prepare an income statement for each year. c. Assume the company uses variable costing. Compute the unit product cost in each year. d. Assume the company uses variable costing. Prepare an income statement for each year.

e. Which method is a better way to analyze results? Justify your reasoning.

10) The Schumer Corporation produces and markets two types of lap tops: Model A and Model B. The following data were gathered on activities during the third quarter: Corporate fixed expenses are common in nature and it was determined that the accountant allocated based on ratio of traceable fixed production costs.

	Model A	Model B
Sales in units	5,000	3,000
Sales price per unit	$ 100	$ 200
Variable production costs per unit	$ 20	$ 40
Traceable fixed production costs	$ 200,000	$ 300,000
Variable selling expenses per unit	$ 10	$12
Traceable fixed selling expenses	$ 10,000	$ 15,000
Allocated portion corporate fixed expenses	$ 100,000	$ 150,000

Required: Prepare a segmented income statement in good form for last quarter. The statement should provide sufficient detail to allow the company to evaluate the performance of the manager of each product line.

Should either of these models be eliminated? why or why not?

Comment on evaluation of each product line manager?