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Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag

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Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $1.90 and total fixed costs are $10,000. The cat food can be sold as it is for $9.15 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,100 cost. The additional processing will yield 10,000 bags of Premium Green and 3,100 bags of Green Deluxe, which can be sold for $8.15 and $6.15 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total gross profit would be: Multiple Choice $102,665 $79,465 $100,565 $69,465 $98,465 Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $66,000 for the past year. Kitchen division sales for the year were $1,170,000, and its variable costs were $788,000. The fixed costs of the division were $331,000. If the kitchen division is dropped, 73% of the fixed costs allocated to it could be eliminated. The impact on Valdez's operating income from eliminating this business segment would be: Multiple Choice $140,370 increase $265.000 increase $265.000 decrease $450,610 decrease $140,370 decrease A company is planning to purchase a machine that will cost $24,000 with a six-year life and no salvage value. The company uses straight-line depreciation. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? $ 108,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (40%) Net income $51,500 4,000 48,000 (103,500) 4,500 (1,800) 2,700 Multiple Choice 33.33% 11.25% 22.50% 50.00%

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