Q1 Tendulkar Inc., has a plant capacity of 40,000 units per month. Unit costs at a capacity are: Direct materials Direct labour Variable overhead Fixed overhead Marketing-fixed $1.00 $1.50 $0.75 $0.75 $1.75 Current monthly sales are 39000 units at $6.30 each. Tuffers Inc. has contacted Tendulkar Inc. about purchasing 1000 units at S6 each. Current sales would not be affected by the special order. If the order is accepted, what is Tendulkar's change in profit? Q2 Lawler Manufacturing Co. has three divisions which are in competition with each other, selling slightly different products. Annual results (including per unit sales) show: Sales Variable costs Fixed costs Division A 6,000@s20 $8 per unit $11,000 10,000aS18 S6 per unit $48,000 Division 14,000@$15 $8 per unit $15,000 The company believes that if it drops Division B, sales of Division A will increase by 3000 units and sales of Division C by 2000 units. Analysis reveals that $36,000 of fixed costs relating to Division B are avoidable for the company if Division B is closed. Calculate the incremental effect on the income of the company if it closes Division B. 3. Federer Ltd. is currently considering whether to replace a machine with a more technically advanced model. Summary data on the existing machine and the replacement machine is shown below. Original cost Useful life Current age Current disposal price (in cash now) $100,000 Terminal disposal price (in 3 yrs) S0 Annual cash operating costs Existing machine $800,000 5 years 2 years Replacement machine $555,000 3 years 0 years Not acquired yet S0 $560,000 $420,0 Assuming Federer Ltd uses the straight line depreciation method and ignoring the effects of tax and the time value of money, what is the difference in the total relevant costs of adopting the two alternative courses of action over the next three years