age Company manufactures two products Model A and Model B that sell for $120 and $80, respectively Each product uses only one type of raw material that costs $6 per pound The company has the capacity to annually produce 100,000 units of each product Its unit costs for each product at this level of activity are given below Model A Model B Direct materials 30 12 Direct labor 20 15 Variable manufacturing overhead 7 5 Traceable fixed manufacturing overhead 16 18 Variable selling expenses 12 8 Common fixed expenses 15 10 Total cost per unit 100 68 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars Assume that Gage expects to produce and sell 90,000 Model Bs during the current year One of Gage's sales representatives has found a new customer that is willing to buy 5,000 additional Model Bs for a price of $39 per unit If Gage accepts the customer's offer, how much will its profits increase or decrease Accept Order Reject Order Net Income Increase (Decrease) Assume that Gage normally produces and sells 60,000 Model Bs and 80,000 Model As per year If Gage discontinues the Model B product line, its sales representatives could increase sales of Model A by 15,000 units If Gage discontinues the Model B product line, how much would profits increase or decrease Continue Eliminate Net Income Increase (Decrease) Assume that Gage expects to produce and sell 80,000 Model As during the current year A supplier has offered to manufacture and deliver 80,000 Model As to Gage for a price of $80 per unit If Gage buys 80,000 units from the supplier instead of making those units, how much will profits increase or decrease Make Buy Net Income Increase (Decrease) Assume that Gage expects to produce and sell 50,000 Model As during the current year A supplier has offered to manufacture and deliver 50,000 Model As to Gage for a price of $80 per unit If Gage buys 50,000 units from the supplier instead of making those units, how much will profits increase or decrease Make Buy Net Income Increase (Decrease)

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age Company manufactures two products Model A and Model B that sell for $120 and $80, respectively. Each product uses only one type of raw

age Company manufactures two products Model A and Model B that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given below:

	Model A	Model B
Direct materials	30	12
Direct labor	20	15
Variable manufacturing overhead	7	5
Traceable fixed manufacturing overhead	16	18
Variable selling expenses	12	8
Common fixed expenses	15	10
Total cost per unit	100	68

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.

Assume that Gage expects to produce and sell 90,000 Model Bs during the current year. One of Gage's sales representatives has found a new customer that is willing to buy 5,000 additional Model Bs for a price of $39 per unit. If Gage accepts the customer's offer, how much will its profits increase or decrease?

Accept Order	Reject Order	Net Income Increase/ (Decrease)

Assume that Gage normally produces and sells 60,000 Model Bs and 80,000 Model As per year. If Gage discontinues the Model B product line, its sales representatives could increase sales of Model A by 15,000 units. If Gage discontinues the Model B product line, how much would profits increase or decrease?

Continue	Eliminate	Net Income Increase/ (Decrease)

Assume that Gage expects to produce and sell 80,000 Model As during the current year. A supplier has offered to manufacture and deliver 80,000 Model As to Gage for a price of $80 per unit. If Gage buys 80,000 units from the supplier instead of making those units, how much will profits increase or decrease?

Make	Buy	Net Income Increase/ (Decrease)

Assume that Gage expects to produce and sell 50,000 Model As during the current year. A supplier has offered to manufacture and deliver 50,000 Model As to Gage for a price of $80 per unit. If Gage buys 50,000 units from the supplier instead of making those units, how much will profits increase or decrease?