Beaucoups Inc. is a multinational enterprise that makes several different products. John, the new controller of the company, finds that he is faced with several business decisions. Each of the following are independent situations facing the business for which the controller has been asked to provide a recommendation. Each question is worth 1 point. 1. Special Order. Suppose the Teeney Company has approached your company, Beaucoups Inc., with a special order. Teeney Company wishes to purchase 56,000 plastic Sparty decals for car windows and offers to pay you $0.90 per decal. Your company has enough capacity to handle the special order and its total production cost is $0.55 per decal, as follows:

Variable costs:
Direct materials	$0.14
Direct labor	$0.08
Variable overhead	$0.13
Fixed overhead	$0.20
Total cost	$0.55

What is the increase or decrease in total operating income from the order if Beaucoups Inc. accepts the special order. Enter an increase as a positive number and a decrease as a negative number.

Tries 0/10

2. Discontinuing a Product Line. Suppose Beaucoups Inc. is considering discontinuing one of its product lines. During the past year, the product line's income statement showed the following:

Sales revenue	$7,442,000
Less: cost of goods sold	$6,500,000
Gross profit	$942,000
Less: operating expenses	$1,600,000
Operating income (loss)	$-658,000

Fixed manufacturing overhead costs account for 10% of the cost of goods, while only 30% of the operating expenses are fixed. Since the product line is just one of Beaucoups Inc.'s products only $790,000 of the product's fixed expenses (the majority of which is advertising) will be eliminated if the product line is discontinued. If the company decides to discontinue the product line, how much will the company's operating income increase or decrease? Enter an increase as a positive number and a decrease as a negative number.

Tries 0/10

Answer questions 3 and 4 with the following information Beaucoups Inc. packages Sparty glass diploma frames to sell to the university that then gives them to graduating students. Cost data for this packaging process are as follows:

		Unit Cost
Packaging materials (e.g., boxes, bubble-wrap)		$2.211
Packaging direct labor		$0.665
Indirect materials (e.g., tape, labels)		$0.472
Packaging supervision (variable)		$0.390
Other fixed manufacturing overhead (given the number of units in the contract)		$1.328
Total packaging cost		$5.066

An outside supplier has offered to do all the packaging for a price of $4 per unit for all packaging-related activities if Beaucoups Inc. signs a one-year contract for a minimum of 143,900 units produced each year. Beaucoups Inc. could use the factory space now occupied by the packaging process to expand production to another product line. This expansion is expected to generate an additional $155,000 in profit per year. 3. Make or Buy. What are the total relevant costs of continuing to package the products internally; that is, which of the annual costs are avoidable if Beaucoups Inc. outsources the packaging process? (1 point)

4. Make or Buy. What is the net cost of outsourcing the packaging process after considering the profit from expanding production of another product? (1 point)

5. Constrained Resources. Beaucoups Inc. is under a time constraint and can only fully produce one of three new products this period. Which of the following products should be fully produced to yield the highest profits for the company?

A) Product A has a contribution margin of $20 and it takes 2 machine hours to complete each product. or B) Product B has a contribution margin of $30 and it takes 2 machine hours to complete each product. or C) Product C has a contribution margin of $50 and it takes 2 machine hours to complete each product.