Preston Company manufactures a product with a unit variable cost of $140 and a unit sales price of $264. Fixed manufacturing costs were $720,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 3,000 units at $210 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

a. Income would decrease by $162,000.

b. Income would increase by $156,000.

c. Income would increase by $6,000.

d. Income would increase by $210,000.

Sardine Kitchen Company produces three sizes of crock pots: small, medium & large. A condensed segmented income statement for a recent period follows:

Large Medium Small Total

Sales $200,000 $200,000 $105,000. $505,000

Variable expenses 125,000 110,000 65,000 300,000

Contribution margin 75,000 90,000 40,000 205,000

Fixed expenses 55,000 55,000 47,000 157,000

Net income (loss) $ 20,000 $ 35,000 $(7,000) $ 48,000 Assume none of the fixed expenses for the small-size crock pot are avoidable. What will be total net income if the small-size crock pot line is dropped?

a. $47,000.

b. $13,000.

c. $8,000.

d. $55,000.

Karpentry Company is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $30 and Karpentry would sell it for $66. The cost to assemble the product is estimated at an additional $21 per unit and the company believes the market would support a price of $85 on the assembled unit. What decision should Karpentry make?

a. Sell before assembly, the company will be better off by $1 per unit.

b. Sell before assembly, the company will be better off by $2 per unit.

c. Process further, the company will be better off by $29 per unit.

d. Process further, the company will be better off by $14 per unit.

Renee Company has old, obsolete inventory on hand. Its scrap value is $16,000. The inventory could be sold for $40,000 if manufactured further at an additional cost of $12,000. Should Renee sell the inventory for $16,000 scrap value? or manufacture further and sell that inventory for $40,000?