Managerial Acct questions part 2

15. Mel's Diner owns a single restaurant, which has a cantina primarily used to seat patrons while they wait on their tables. The company is considering eliminating the cantina. Segmented contribution income statements are as follows and fixed costs applicable to both segments are allocated on the basis of square footage. Cantina Total Restaurant $200,000 $800,000 $1,000,000 Sales Variable costs 475,000 160,000 635,000 50,000 Direct fixed costs 15,000 65,000 250,000 Allocated fixed costs 212,500 37,500 Net income 62,500 12.500 50.000 What effect will occur ifMel's Diner eliminates the cantina ifthere is no effect on restaurant sales? A. Net income will increase by $12,500. B. Net income will decrease to $37,500. C. Net income will decline by $25,000. D. Net income will be $62,500. 16 Abacus has 800 obsolete calculators that are carried in inventory at a cost of S1,920. Ifthese calculators are upgraded at a cost of $3,100, they could be sold for $4,500. Alternatively, the calculators could be sold 'as is" for $1,600. What is the net advantage or disadvantage of reworking the calculators? $1,400 advantage B. $2,900 advantage C. $5,440 disadvantage D. $200 disadvantage 17. The following are production and cost data for two products, A and B, produced in batches of 100 units Product A Product B $450 $340 Contribution margin per batch Machine set-ups needed per batch 25 20 The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the incremental profit from producing Product A instead of Product B for the year? A. $216,000 $204,000 C. $12,000 D. $54,000