A)

Champion Company makes a variety of paper products. One product is a 30pound copier paper, packaged 3,000 sheets in a box. One box usually sells for $20. However, a large bank offered to purchase 7,000 boxes at $15 per box. Costs per box are as follows: Direct materials $6 Direct labor 2 Variable overhead 2 Fixed overhead 3 No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable. Should Champion accept the order? 0 a, Yes, income will increase by $19,000. 0 b, Yes, income will increase by $35,000. 0 c, No, income will decrease by $43,000. 0 d, No, income will decrease by $86,000. 0 e, It doesn't matter; there will be no impact on income. AlphaOmega Industries manufactures 50,000 components per year. The manufacturing cost of the components was determined as follows: Direct materials $ 70,000 Direct labor 110,000 Variable overhead 20,000 Fixed overhead $300 Total $250,000 An outside supplier has offered to sell the component to AlphaOmega for $10 per unit. Fixed costs will remain the same if the component is purchased from an outside supplier. What will be the effect on income if AlphaOmega Industries purchases the component from the outside supplier? O a. $3 00,000 increase 0 b. $55,000 increase 0 c. $55,000 decrease 0 CI. $300,000 decrease Connolly Company produces two types of lamps, classic and fancy, with unit contribution margins of $13 and $21, respectively. Each lamp must spend time on a special machine. The firm owns four machines that together provide 18,000 hours of machine time per year. The classic lamp requires 0.20 hour of machine time, and the fancy lamp requires 0.50 hour of machine time. What is the total contribution margin of the optimal mix of classic and fancy lamps? Oa. $1,170,000 Ob. $1,000,000 Oc. $1,280,000 Od. $90,000 Oe. $950,000