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Lambert, Inc. manufactures several types of accessories. For the year, the knit hats and scarves line had sales of $400,000, variable expenses of $310,000, and

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Lambert, Inc. manufactures several types of accessories. For the year, the knit hats and scarves line had sales of $400,000, variable expenses of $310,000, and fixed expenses of $120,000. Therefore, the knit hats and scarves line had a net loss of $30,000. If Lambert eliminates the knit hats and scarves line, $20,000 of fixed costs will remain. Prepare an analysis showing (1) whether the company should keep or eliminate the knit hats and scarves line, and (2) the difference in income between the two alternatives. Juanita Company must decide whether to make or buy some of its components for the appliances it produces. The costs of producing 166,000 electrical cords for its appliances are as follows. Direct materials: $90,000; Variable overhead: $32,000; Direct labor: 20,000; Fixed overhead: 24,000 Instead of making the electrical cords at an average cost per unit of $1.00 ($166,000 + 166.000), the company has an opportunity to buy the cords at $0.90 unit. If the company purchases the cords, all variable costs and one-fourth of the fixed costs will be eliminated. Prepare an analysis showing (1) whether the company should make or buy the electrical cords, and (2) the difference in income between the two alternatives

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