Jack's Lumber Yard receives 8,000 large trees each period that it subsequently processes into rough logs by stripping off the tree bark and leaves. Jacks then must decide whether to sell its rough logs (for use in log cabin construction) at split-off or to process them further into refined lumber (for use in regular construction framing). Jack's normally sells logs for a per-unit price of $505. Alternately, each log can be processed further into 800 board feet of lumber at an additional cost of $0.05 per board foot. Also, lumber can be sold for $0.75 per board foot. (Note: One tree is equal to one rough log.)

1. What is the total contribution to income from selling the logs for log cabin construction? $

2. What is the total contribution to income from processing the logs into lumber? $

Yuhu manufactures cell phones and is developing a new model with a feature (aptly named Don't Drink and Dial) that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6:00 a.m. The new phone model has a target price of $340. Management requires a 10% profit on new product revenues.

round to the nearest dollar.

1. Calculate the amount of desired profit. $

2. Calculate the target cost.

Rabbit Foot Motors has been approached by a new customer with an offer to purchase 5,000 units of its hands-free, Wi-Fi-enabled automotive modelthe SMAKat a price of $18,000 per automobile. Rabbit Foots other sales would not be affected by this new customer offer. Rabbit Foot normally produces 100,000 units of its SMAK model per year but only plans to produce and sell 90,000 in the coming year. The normal sales price is $35,000 per SMAK. Unit cost information for the normal level of activity is as follows:

Direct materials	$10,000
Direct labor	2,000
Variable overhead	4,000
Fixed overhead	8,000
Total	$24,000

Fixed overhead will not be affected by whether or not the special order is accepted.

1. What are the relevant costs and benefits of the two alternatives (accept or reject the special order)?

A. Special order price, direct materials, direct labor, and variable overhead. B.Special order price, direct materials, direct labor, variable overhead, and fixed overhead

C. Normal price, direct materials, direct labor, and variable overhead. D.Normal price, direct materials, direct labor, variable overhead, and fixed overhead.

2. By how much will operating income increase or decrease if the order is accepted?

A. increase by $_______ B. decrease by $_________