Problem #1 Bain Corporation makes and sells state-of-the art electronics products. One of its segments produces The Clock, an innovative alarm clock. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the clocks is between 20.000 and 80.000 units per year. Revenue 50.000 units x $17.00) $850.000 Unit-level variable costs: Materials cost 50.000 x $3.90) (195.000) Labor cost (50.000 x $2.40) (120.000 Manufacturing overhead (50.000 x $1.05) (52,500) Shipping and handling (50,000 x $0.45) Sales commissions (50.000 x $1.15 (57.500) Advertising costs (139.000 Salary of production supervisor (85,000) Allocated companywide facility-level expenses (183.000 Net loss $ 4,500) (22.500) 1. Which of the above costs are: a. Variable b. Fixed 2. What is the division's breakeven point if Bain's goal is for the division to earn a profit of $100,000, by what percent must sales increase? 3. Consider each of the following scenarios independently: a. A large discount store has approached the owner of Bain about buying 10,000 clocks. It would replace The Clock's label with its own logo to avoid affecting Bain's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is only willing to pay only $8.10 per clock. Based on quantitative factors alone, should Bain accept the special order Support your answer with appropriate computations. Specifically, by what amount would the special order increase or decrease profitability? Would you answer change if the special order was for 40.000 clocks b. Bain has the opportunity to buy the 50,000 clocks it currently makes from a reliable competing manufacturer for $8.50 each. The product meets Bain's quality standards. Bain would continue to use its own logo, advertising program, and sales program to distribute the products. Should Bain buy the clocks or continue to make them? Support your answer with appropriate computations. Specifically, how much more or less would it cost to buy the clocks than to make them c. Because the clock division is currently operating at a loss, should it be eliminated from the company's operations Support your answer with appropriate computations. Specifically, by what amount would the segment's elimination increase or decrease profitability