Blossom Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,000,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials $1.90 $1,900,000 Direct labor 0.40 400,000 Variable manufacturing overhead 0.95 950,000 Fixed manufacturing overhead 1.40 ,400,000 Variable selling expenses 0.30 300,000 Totals $4.95 $4,950,000 The U.S. Army has approached Blossom Fiber and expressed an interest in purchasing 249,000 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $0.95 per undergarment to cover all other costs and provide a profit. Presently, Blossom Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Blossom Fiber accepts the Army's offer, it will not incur any variable selli g expenses related to this order. Prepare an incremental analysis for the Blossom Fiber. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Reject Accept Increase Order Order (Decrease) Revenues Variable costs: Direct materials Direct labor Variable overhead Total variable costs Net income Should Blossom Fiber accept the Army's offer? Blossom Fiber should the Army's offer. Which of the following is a true statement about cost behavior in incremental analysis? 1. Fixed costs will not change between alternative courses of action. 2. Fixed costs may change between alternative courses of action. 3. Variable costs will always change between alternative courses of action. 01 O 2 0 3 O 2 and 3It costs Sheridan Company $12 of variable and $5 of fixed costs to produce one scale which normally sells for $39. A foreign wholesaler offers to purchase 3900 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Sheridan has sufficient unused capacity to produce the 3900 scales. If the special order is accepted, what will be the effect on net income? O $7800 increase O $7800 decrease O $27300 decrease O $58500 increase Marigold Corp. incurs the following costs to produce 8500 units of a subcomponent: Direct materials $9000 Direct labor 12750 Variable overhead 12800 Fixed overhead 18000 An outside supplier has offered to sell Marigold the subcomponent for $2.10 a unit. If Marigold could avoid $3000 of fixed overhead by accepting the offer, net income would increase (decrease) by O $(13700). $(6750). O $(14500). O $19700. Waterway Industries incurs the following costs to produce 10500 units of a subcomponent: Direct materials $8000 Direct labor 11500 Variable overhead 12000 Fixed overhead 18000 An outside supplier has offered to sell Waterway the subcomponent for $2.30 a unit. No fixed overhead costs are avoidable. If Waterway accepts the offer, it could use the production capacity to produce another product that would generate additional income of $3600. The increase (decrease) in net income from accepting the offer would be O $3750. O $10950. O $(3750). O $(3600).Concord Corporation is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $22 and Concord would sell it for $50, The cost to assemble the product is estimated at $14 per unit and the company believes the market would support a price of $62 on the assembled unit.What decision should Concord make and why? 0 Sell before assembly because the company will be better off by $2 per unit. 0 Sell before assembly because the company will be better off by $12 per unit. 0 Process further because the company will be better off by $20 per unit. 0 Process further because the company will be better off by $14 per unit. Coronado industries has inventory on hand that cost $15900. Its scrap value is $25000. The inventory could be sold for $75000 if manufactured further at an additional cost of $15800. What should Coronado do? 0 Sell the inventory for $25000 scrap value O Dispose of the inventory to avoid any further decline in value 0 Hold the inventory at its $15900 cost 0 Manufacture further and sell it for $75000 Bonita Industries is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $230000 $376000 Accumulated depreciation 118000 - 0 - Annual operating costs 300000 240000 If the old equipment is replaced now, it can be sold for $30000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The net advantage (disadvantage) of replacing the old equipment with the new equipment is O $30000 O $(46000) O $(70000) O $118000 A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost? 0 The book value of the old equipment. 0 Depreciation expense of the old equipment. 0 The loss on disposal of the old equipment. 0 The current disposal price of the old equipment. A segment has the following data: Sales $640000 Variable expenses 324000 Fixed expenses 550000 What will be the incremental effect on net income if this segment is eliminated, assuming the segment's fixed expenses can be allocated to profitable segments? O $316000 increase $316000 decrease O $5400 decrease O Cannot be determined from the data provided When will the elimination of a product line have no effect on the company's overall profits? O When the avoidable fixed costs equal the product line's contribution margin. O When the unavoidable fixed costs equal the product line's contribution margin. O When there are no fixed costs incurred by the product line. When the product line contribution margin is negative. Swifty Corporation plans to introduce a new product and is using the target cost approach. Projected sales revenue is $803000 ($4.05 per unit) and target costs are $627750. What is the desired profit per unit? O $0.88 O $2.03 O $3.17 None of the above Marigold Corp. is contemplating the production and sale of a new widget. Projected sales are $288000 (or 72000 units) and desired profit is $31680. What is the target unit cost? O $4.00 O $3.56 O $4.44 O $4.40