A company has three product lines, one of which reflects the following results: * Sales Variable expenses Contribution margin Fixed expenses Net loss $215,000 125,000 90,000 140,000 $(50,000) If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will: Increase by $50,000 Decrease by $90,000 O Decrease by $6,000 Increase by $6,000 None of the above It costs ARC Company $12 of variable costs and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 each. ARC would incur special shipping costs of $1 per scale if the order is accepted. ARC has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?* $4,000 increase $4,000 decrease $6,000 decrease $30,000 increase None of the above Freddy Company has the following unit cost behavior, based on 10,000 units: * S4 10 Direct materials Direct labor Variable overhead Fixed overhead 8 A foreign company wants to purchase 2,000 units at a special unit price of $25. The nomal price per unit is $40. In addition, a special stamping machine will have to be purchased for $6,000 in order to stamp the foreign company's name on the product. The order can be fulfilled using the company's existing capacity without affecting any other order. The incremental income (loss) from accepting the order is: $(1,000) $(2,000) $2,000 $4,000 None of the above Home, Inc. can produce 100 units of a component part with the following costs: * Direct Materials $30,000 Direct Labor 13,000 Variable Overhead 32,000 Fixed Overhead 22,000 If Home Inc. can purchase the component part externally for $88,000 and only $8,000 of the fixed costs can be avoided, what is the correct make-or-buy decision? Make and save $1,000 Buy and save $1,000 O Make and save $5,000 Buy and save $13,000 None of the above Moon's Manufacturing Company can make 1,000 units of a necessary component part with the following costs: * Direct Materials $24,000 Direct Labor 16,000 Variable Overhead 4,000 Fixed Overhead 7,000 If Moon's Manufacturing Company purchases the component extemally, $3,000 of the fixed costs can be avoided. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Moon Company would accept to acquire the 1,000 units externally? $51,000 O $47,000 O $48,000 0 $44,000 O None of the above