1. As manager of a division responsible for both production and sales of products and, hence, division profits, you are looking for ways to increase the profits of your division. You are considering changing your cost structure to include more fixed costs and less variable costs by automating some of the production activities currently performed by people. What are some of the considerations that you should keep in mind as you ponder this decision?
2. If a company reduce its selling price, how will the break-even-point be affected?
3. John Diaz is the President of Pacific Refrigeration. The company has 2,000 employees. It manufactures and sells a variety of refrigeration units for commercial use. Recently, the company experienced large losses due to a downturn in the economy and has a subsequent decline in sales. John thinks the losses

were particularly large because of the companys cost structure.

3. 1. Expand on Johns thought. How are large losses related to the cost structure?
   2. Identify up to three possible ways to mitigate this problem in the future.
4. In a normal year, DK Industries has $24,000,000 of fixed manufacturing costs and produces 60,000
5. Sometimes direct-labor cost is the best cost-allocation base for overhead application even if wage

rates vary within a department. Do you agree? Explain