Owen's Furniture manufactures a small table and a large table. The small table sells for

$ 900$900,

has variable costs of

$ 550$550

per table, and takes 10 direct labor hours to manufacture. The large table sells for

$ 1 comma 500$1,500,

has variable costs of

$ 970$970,

and takes eight direct labor hours to manufacture. The company has a maximum of

5 comma 0005,000

direct labor hours per month when operating at full capacity. If there are no constraints on sales of either of the products and the company could choose any proportions of product mix that they wanted, the maximum contribution margin that the company could earn will be ________.

A.

$ 1 comma 543 comma 750$1,543,750

B.

$ 331 comma 250$331,250

C.

$ 606 comma 250$606,250

D.

$ 937 comma 500$937,500

Potlatch Company manufactures sonars for fishing boats. Model 100 sells for

$ 300$300.

Potlatch produces and sells

6 comma 0006,000

units per year. Cost data are as follows:

Variable manufacturing	$ 95$95	per unit
Variable selling and administrative	$ 6$6	per unit
Fixed manufacturing	$ 290 comma 000$290,000	per year
Fixed selling and administrative	$ 140 comma 000$140,000	per year

An offer has come in for a

oneminustime

sale of

200200

units at a special price of

$ 120$120

per unit. The marketing manager says that the sale will not affect the company's regular sales activities, and that it will not require any variable selling and administrative costs. The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way. What is the effect of this deal on operating income?

A.

Operating income increases by

$ 5 comma 000$5,000.

B.

Operating income increases by

$ 300$300.

C.

Operating income increases by

$ 1 comma 200$1,200.

D.

Operating income decreases by

$ 5 comma 000$5,000.

Battista Stationery Company is a

priceminustaker

and uses target pricing. The company has completed an analysis of its revenues, costs, and desired profits and has calculated its target full product cost. Refer to the followinginformation:

Target full product cost	$600 comma 000600,000	per year
Actual fixed cost	$ 270 comma 000$270,000	per year
Actual variable cost	$ 3$3	per unit
Production volume	150 comma 000150,000	units per year

Actual costs are currently higher than target full product cost. Assume all products produced are sold. Assuming that variable costs are dependent on commodity prices and cannot be reduced, what is the target fixed cost?

A.

$ 450 comma 000$450,000

B.

$ 330 comma 000$330,000

C.

$ 150 comma 000$150,000

D.

$ 600 comma 000$600,000

Battista Stationery Company is a

priceminustaker

and uses target pricing. The company has completed an analysis of its revenues, costs, and desired profits and has calculated its target full product cost. Refer to the followinginformation:

Target full product cost	$600 comma 000600,000	per year
Actual fixed cost	$ 270 comma 000$270,000	per year
Actual variable cost	$ 3$3	per unit
Production volume	150 comma 000150,000	units per year

Actual costs are currently higher than target full product cost. Assume all products produced are sold. Assuming that variable costs are dependent on commodity prices and cannot be reduced, what is the target fixed cost?

A.

$ 450 comma 000$450,000

B.

$ 330 comma 000$330,000

C.

$ 150 comma 000$150,000

D.

$ 600 comma 000$600,000