A. ) Fabio Corporation is considering eliminating a department that has a contribution margin of $30,000 and $60,000 in fixed costs. Of the fixed costs, $15,000 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

a decrease of $30,000.

an increase of $30,000.

a decrease of $15,000.

an increase of $15,000.

B)

Aholt Corporation makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:

Direct materials	$11.30
Direct labor	22.70
Variable manufacturing overhead	1.20
Fixed manufacturing overhead	24.70
Unit product cost	$59.90

An outside supplier has offered to sell the company all of these parts it needs for $46.20 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $264,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $21.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. How much of the unit product cost of $59.90 is relevant in the decision of whether to make or buy the part?

$38.00 per unit

$59.90 per unit

$35.20 per unit

$22.70 per unit

C)

Wehn Refiners Inc., processes sugar cane that it purchases from farmers. Sugar cane is processed in batches. A batch of sugar cane costs $40 to buy from farmers and $13 to crush in the company's plant. Two intermediate products, cane fiber and cane juice, emerge from the crushing process. The cane fiber can be sold as is for $28 or processed further for $18 to make the end product industrial fiber that is sold for $37. The cane juice can be sold as is for $31 or processed further for $25 to make the end product molasses that is sold for $66. How much more profit (loss) does the company make by processing one batch of sugar cane into the end products industrial fiber and molasses?

($96)

$1

$7

$6 D)Crane Corporation makes four products in a single facility. Data concerning these products appear below:

	Products
	A	B	C	D
Selling price per unit	$35.30	$30.20	$20.80	$26.00
Variable manufacturing cost per unit	$16.50	$15.80	$7.90	$8.50
Variable selling cost per unit	$3.80	$1.60	$1.90	$3.30
Milling machine minutes per unit	3.30	1.70	2.10	2.50
Monthly demand in units	4,000	1,000	3,000	1,000

The milling machines are potentially the constraint in the production facility. A total of 22,600 minutes are available per month on these machines. How many minutes of milling machine time would be required to satisfy demand for all four products?

22,600

23,700

18,400

9,000