Assume a retailing company has two departmentsDepartment A and Department B. The companys most recent contribution format income statement follows:

	Total			Department A					Department B
Sales	$	800,000			$	350,000				$	450,000
Variable expenses		320,000				120,000					200,000
Contribution margin		480,000				230,000					250,000
Fixed expenses		400,000				140,000					260,000
Net operating income (loss)	$	80,000			$	90,000				$	(10,000	)

The company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 6%. What is the financial advantage (disadvantage) of discontinuing Department B?

Assume a company makes only three products, A, B, and C:

	Product A					Product B					Product C
Estimated customer demand in units			700					600					800
Selling price per unit		$	80				$	65				$	45
Variable cost per unit		$	35				$	26				$	20
Machine-hours per unit			2.5					3.0					1.25

The company has only 1,900 machine-hours available. What is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource?

Assume that each year a company normally produces and sells 80,000 units of its only product for $40 per unit. The companys average unit costs at this level of activity are given below:

Direct materials	$	9.50
Direct labor		10.00
Variable manufacturing overhead		2.80
Fixed manufacturing overhead		5.00
Variable selling expenses		1.70
Fixed selling expenses		4.50
Total cost per unit	$	33.50

The companys relevant range of production is 70,000 - 100,000 units. It believes that spending an additional $240,000 on advertising would increase unit sales by 25%. What is the financial advantage (disadvantage) of spending the additional money on advertising?