Jackie has the following information to evaluate: her current salary of $74,000 versus total revenues of $100,000 and expenses of $65,000 from starting a new business. How much is the opportunity cost associated with staying at her current job?

	$74,000
	$(9,000)
	$35,000
	$165,000

Question

Pluto Incorporated provided the following information regarding its single product:

Direct materials used	$240,000
Direct labor incurred	$420,000
Variable manufacturing overhead	$160,000
Fixed manufacturing overhead	$100,000
Variable selling and administrative expenses	$60,000
Fixed selling and administrative expenses	$20,000

The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.

What would be the effect on operating income of accepting a special order for 1,000 units at a sale price of $40 per product? Note: The special order units would not require any variable selling and administrative expenses.

	Decrease by $19,500
	Decrease by $18,000
	Increase by $18,000
	Increase by $19,500

Question

Brigg's Breakfast Appliances manufactures two products: waffle makers and coffee makers. The following data are available:

	Waffle Makers	Coffee Makers
Sales price	$120	$215
Variable cost	$45	$150

The company can manufacture two waffle makers per machine hour and three coffee makers per machine hour. The company's production capacity is 1,200 machine hours per month.

What is the contribution margin per machine hour for coffee makers?

	$195
	$65
	$130
	$1,095