A.

Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.30; direct labor, $14.30, variable overhead $3.30 and fixed overhead, $8.30. An outside supplier has offered to sell the product to Paxton for $36.20. Compute the net incremental cost or savings of buying the component.

B.

Gion Company is considering eliminating its windows division, which reported an operating loss for the recent year of $120,000. Division sales for the year were $1,260,000 and its variable costs were $1,125,000. The fixed costs of the division were $305,000. If the windows division is dropped, 50% of the fixed costs allocated to it could be eliminated. The impact on Gions operating income from eliminating this business segment would be:

C.

Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $61,000 for the past year. Kitchen division sales for the year were $1,120,000, and its variable costs were $783,000. The fixed costs of the division were $324,000. If the kitchen division is dropped, 68% of the fixed costs allocated to it could be eliminated. The impact on Valdezs operating income from eliminating this business segment would be:

D.

Lattimer Company had the following results of operations for the past year:

Sales (15,000 units at $11.65)				$	174,750
Variable manufacturing costs	$	92,250
Fixed manufacturing costs		15,750
Selling and administrative expenses (all fixed)		30,750			(138,750	)
Operating income				$	36,000

A foreign company offers to buy 4,300 units at $6.80 per unit. In addition to existing costs, selling these units would add a $0.18 selling cost for export fees. Lattimers annual production capacity is 25,000 units. If Lattimer accepts this additional business, the special order will yield a: