Kingston Manufacturing has 29,900 labor hours available for producing X and Y. Consider the following information:

Product XProduct YRequired labor time per unit (hours)23Maximum demand (units)7,0008,000Contribution margin per unit$5$6Contribution margin per labor hour$2.00$1.50

If Kingston follows proper managerial accounting practices, which of the following production schedules should the company set?

Product XProduct YA.0 units8,000 unitsB.1,750 units8,000 unitsC.7,000 units0 unitsD.7,000 units5,300 unitsE.7,000 units8,000 units

Multiple Choice

• Choice A
• Choice B
• Choice C
• Choice D
• Choice E

In early July, Colin Marks purchased a $86 ticket to the December 15 game of the Sarasota Shippers. Parking for the game was expected to cost approximately $38, and Marks would probably spend another $31 for a souvenir program and food. It is now December 14. The Shippers were having a miserable season and the temperature was expected to peak at 5 degrees on game day. Marks therefore decided to skip the game and took his wife to the movies, with tickets and dinner costing $67. The sunk cost associated with this decision situation is:

Multiple Choice

• $67.
• None of the answers is correct.
• $86.
• $19.
• $155.

Elkhorn, Inc., which has excess capacity, received a special order for 4,000 units at a price of $16 per unit. Currently, production and sales are anticipated to be 12,000 units without considering the special order. Budget information for the current year follows.

Sales$240,000Less: Cost of Goods Sold180,000Gross Margin$60,000

Cost of goods sold includes $36,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:

Multiple Choice

• decrease by $4,000.
• increase by $4,000.
• None of the answers is correct.
• decrease by $16,000.