Question 1 (15 Marks) The Tasmanian Division of McGregor Ltd makes and sells tables and beds. The following estimated revenue and cost information from the Division's activity-based costing system is available for 2018: 2,000 Tables 2,500 Beds Revenues $250,000 $500,000 Direct materials and direct labour costs 150,000 262,500 Depreciation on equipment used exclusively by each 21,000 29,000 product line Marketing and distribution costs: $20,000 (fixed) + ($375 per shipment x 40 shipments) 35,000 $30,000 (fixed) + ($375 per shipment x 100 shipments) 67,500 Fixed administration costs of the Division allocated to 55,000 110,000 product lines on the basis of revenues Corporate costs allocated to product lines on the basis of 25,000 50,000 revenues Total costs 286,000 519,000 Operating profit (loss) $(36,000) $(19,000) Additional information: a) On 1 January 2018, the equipment for each product line has a carrying amount of $50,000 and zero disposal value. Any equipment not used will remain idle. b) Fixed marketing and distribution costs are avoidable if the line is discontinued. C) Fixed administration costs of the Division and corporate costs are unavoidable. d) Each shipment includes 50 tables or 25 beds. Required: 1. On the basis of financial considerations alone, should Tasmanian discontinue the table's product line for the year, assuming the released facilities remain idle? What would be the financial effect of dropping this product line? Show your workings. (8 Marks) 2. Tasmanian received a one-time order from overseas for 1,000 beds at $120 per bed. Tasmanian has to pay transport costs for $12,500 but no additional marketing and distribution costs for this order. a. If Tasmanian has enough excess capacity for this order, should the Tasmanian Division accept this one-time order? What would be the financial effect of accepting the one-time order? Show your workings. (4 Marks) b. If Tasmanian is working at full capacity. What would be the minimum price to accept the one-time order and decrease sales by 1,000 beds to regular customers? Show your workings