Chapter 12 #1 The management of Bernese Company is considering whether one of the department's in its retail stores should be climinated. The contribution margin in the department is $150.000 per year. Fixed expenses allocated to the department are $130,000 per year. It is estimated that S120,000 of these fixed expenses will be eliminated if the department is discontinued. Pari. (a) Which culs, if any, are irrelevant to this decision? Part (b) If the department is climinated what will be the impact on the company's overall act operating income? #2 Campusile Company prxhues 2,000 watts per year, which are used in the assembly of one of its products. The unit proxluct cel of these parts is: Variable manufacturinty cost $64 Fixed manufacturing cost Unit product cost S100 The parl. can be purchased fremnati nasice supplier al. $80 per unit. The part is [marchased from the calside supplier, l.wo-thirds of the lixed mamul.acluring costs can be eliminated. Part (a) What costs, if any, arc relevant to this decision? Which costs are irrelevant? Parl. (1) What wenildile ammul impact on the company's niet operating interne beana result of buying the phari. from the outside supplier? Part (c) If the company purchased the parts from the outside and was able to free up factory space to pursue a new project that would bring in an extra $20,000 in income, what would happen to the overall profits of the company? #3 Ginger Company sells its product for $42 pcr unit. The company's unit product cost based on the full capacity of 400.000 units is as follows: Direct materials Direct labor Manufacturing overhead tinit product cost S & 10 12 $30 II A special order offering to buy 40.000 units has been received from a forcign distributor. The only selling costs that would be incurred on this order would be 56 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. If the foreign distrilntor is willing to pay $32 per unit, what would the impact on profits be if the company takes the special order? #4 Selling price per unit Variable cost per unit Board feet per unit Monthly demand Chairs 580 S30 2 600 Tables 5400 S200 10 100 The company's supplier of hardwood will only be able to supply 2,000 board feet this month. How many chairs and tables should the company produce to best utilize the 2,000 board feet of wood? (in other words, which combination would maximize profits?) #5 The Pixalator Corporation has 8,000 obsolete units of a product that are carried in inventory at a manufacturing cost of $160,000. If the units are remachined for $40,000, they could be sold for $72,000. Alternatively, the units could be sold for scrap for $28,000. Should the products be sold as is or processed further (show calculations)