***EXPLAIN WHY THE WRONG ANSWERS(THE ONES THAT ARE NOT IN BOLD) ARE WRONG.***

5) Compute the break-even point in dollars) if fixed costs are $540,000 and variable cost are 70% of sales a) $3,850,000 *b) $1,800,000 c) $1,650,000 d) $900,000 6) Max, Inc., can sell a large piece of machinery for $90,000. The machinery originally cost $240.000 and has accumulated depreciation of $130,000. Max will have to pay a 5% sales commission on the sale. Rather than sell, Max is considering leasing the machine. It can be leased for four years for $24,000 per year. Max has estimated future operating expenses to be $3,000 per year, and Max will be responsible for those expenses. Which of the following options most accurately describes the analysis and decision for Max? a) Lease-because differential revenues are $6,000 if Max leases rather than sells b) Lease-because Max will lose $20,000 if it sells the equipment for less than its $110,000 book value c) Sellbecause differential income of selling rather than leasing is $6,000 *d) Sell because differential income is $1,500 if Max sells rather than leaseal 7) The condensed income statement for a business for the past year is presented as follows: Product G H Total Sales $200,000 $180,000 $320,000 $700,000 Less variable costs 120.000 160,000 200,000 480,000 Contribution margin $ 80,000 $20,000 $120,000 $220,00 Less fixed costs 25,000 30,000 40,000 95,000 Income (Loss) from Operations 55,000 10,000 80.000 125,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G? a) $10,000 increase b) $20,000 increase c) $10,000 decrease *d) $20,000 decrease