Mickey Tire Company makes a special kind of racing tire. Variable costs are $230 perunit, and fixed costs are $20,000 per month. Mickey sells 300 units per month at a sales price of $350. If the quality of the tire isupgraded, the company believes it can increase the sales price to $380. Ifso, the variable cost will increase to $250 perunit, and the fixed costs will rise by 15%. If Mickey decides toupgrade, how will operating income beaffected?

A.

Operating income will decrease by $3,000.

B.

Operating income will increase by $6,000.

C.

Operating income will decrease by $6,000.

D.

Operating income will remain the same

Jones Manufacturing Co. is considering investing in specialized equipment costing $940,000. The equipment has a useful life of four years and a residual value of $10,000. Depreciation is calculated using the straightline method. The expected net cash inflows are expected to be $310,000 per year. What is the ARR of theinvestment?

A.

16.32%

B.

15.96%

C.

16.49%

D.

15.79%

A company produces1,000 packages of dog treats per month. The sales price is$5 per pack. Variable cost is$1.50 perunit, and fixed costs are$1,700 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from$1.50 to$1.70 perunit, and fixed costs will increase by10%. At what sales price for the new product will the two alternatives(sell as is or processfurther) produce the same operatingincome? (Round your answer to the nearestcent.)

A.

$5.00

B.

$3.57

C.

$1.80

D.

$5.37