Franklin, Inc. has two divisions, Seward and Charles. Following is the income statement for the previous year: Seward Charles Sales $ 603,200 $ 403,000 Variable Costs 198,100 253,200 Contribution Margin $ 405,100 $ 149,800 Fixed Costs 177,700 172,800 Profit Margin $ 227,400 $ (23,000 ) Of the total fixed costs, $302,700 are common fixed costs that are allocated equally between the divisions. How much did the Charles division incur in direct fixed costs?

It costs Camp, Inc. $37 per unit to manufacture 1,000 units per month of a product that it can sell for $52 each. Alternatively, Camp could process the units further into a more complex product, which would cost an additional $31 per unit. Camp could sell the more complex product for $78 each. How would processing the product further affect Camp's profit?

Castle Corp. produces three products, and is currently facing a labor shortage. The selling price, costs, and labor requirements of the three products are as follows:

	Product A		Product B		Product C
Selling price	$	57.00	$	42.00	$	49.00
Variable cost per unit	$	39.00	$	18.00	$	34.00
Direct labor hours per unit		1.5		3		2

Castle has unlimited demand for all its products. Which product/s should Castle Corp produce to maximize profit during the labor shortage?

Elmwood, Inc. currently sells 13,900 units of its product per year for $119 each. Variable costs total $94 per unit. Elmwoods manager believes that if a new machine is leased for $302,325 per year, modifications can be made to the product that will increase its retail value. These modifications will increase variable costs by $10.50 per unit, but Elmwood is hoping to sell the modified units for $149 each. a-1. Should Elmwood modify the units or sell them as is?

multiple choice

• Sell as is

• Sell with modifications

a-2. How much will the decision affect profit?

b. What is the least Elmwood could charge for the modified units to make it worthwhile to modify them? (Round your answer to 2 decimal places.)

c. The leasing company is willing to negotiate the price of the machine lease. What is the most Elmwood would be willing to pay to lease the machine if they plan to charge $149 for the modified units?

Rock Inc. has three divisions, Granite, Lime and Nina. All fixed costs are unavoidable Following is the income statement for the previous year:

	Granite		Lime				Nina				Total
Sales	$	517,000		$	272,500			$	230,000		$	1,019,500
Variable Costs		192,000			124,300				100,300			416,600
Contribution Margin		325,000			148,200				129,700			602,900
Fixed Costs (allocated)		271,000			164,250				110,750			546,000
Profit Margin	$	54,000		$	(16,050	)		$	18,950		$	56,900

a. What would Rocks profit margin be if the Lime division were dropped?

b. What would Rocks profit margin be if the Nina division were dropped?

Ross has received a special order for 12,000 units of its product at a special price of $24. The product normally sells for $30 and has the following manufacturing costs:

	Per unit
Direct materials		$	11
Direct labor			7
Variable manufacturing overhead			3
Fixed manufacturing overhead			7
Unit cost		$	28

Assume that Ross has sufficient capacity to fill the order. If Ross accepts the order, what effect will the order have on the companys short-term profit?

Maple Inc. manufactures a product that costs $45 per unit plus $50,000 in fixed costs each month. Maple currently sells 5,000 of these units per month for $60 each. If Maple leased a machine for $30,000 a month, it could add features to the product that would allow it to increase the selling price. It would cost an additional $10 per unit to add these features. How much would Maple have to charge for the product with additional features to make it worthwhile to lease the machine?

Multiple Choice

• $55

• $60

• $71

• $76

You wish to take an Excel course. You may enroll at one within your school or you may take a community class at the local library. You've gathered the following information to aid in your decision-making process.

Costs/Benefits	College Course	Community Course
Cost	$3,000	$1,000
Distance to course	0.25 miles (walking distance)	15 miles (driving distance)
Timing of course	Weekday	Weekend
Number of meetings	16	8
Qualitative considerations	Convenience, quality of instruction	Flexibility, brief duration

Pretend transportation (gas, mileage, and parking) cost $200 per class session at the library. If you consider solely the cost - including transportation - of each alternative, which would you choose?

Multiple Choice

• Neither alternative

• College course

• Community course

• Both alternatives

Which of the following is not a step in the managerial decision-making process?

Multiple Choice

• Identify the decision problem.

• Review the results of the decision-making process.

• Choose the appropriate hurdle rate.

• Evaluate the costs and benefits of the alternatives.

Avocado has received a special order for 2,000 units of its product at a special price. The product normally sells for $400 and has the following manufacturing costs:

	Per unit
Direct materials		$	120
Direct labor			80
Variable manufacturing overhead			60
Fixed manufacturing overhead			100
Unit cost		$	360

Assume that Avocado has sufficient capacity to fill the order. What special order price should Avocado charge to make a $20,000 incremental profit?

Multiple Choice

• $400

• $360

• $270

• $260