QUESTION 38 Raleigh, Inc, makes a unique product and uses cost-plus pricing. The firm has $9,000,000 of average assets, and wants an 8% return on assets. Additional data: Units made and sold 1,000 units Variable costs $1,000/unit Fixed costs $4,000,000 Using cost-plus pricing, what should the sales price per unit be? A. $5,720 B. $9,000 C. $1,080 D. $1,000 QUESTION 40 Columbus, Inc. makes two products and has the following financial data: Total Product A Product B Sales revenue $930,000 $600,000 $330,000 Variable costs (540,000) (250,000) (290,000) Contribution margin $390,000 $350,000 $40,000 Fixed costs (160,000) (70,000) (90,000) Operating income (loss) $230,000 $280,000 $(50,000) If Product B is dropped, total fixed costs remain unchanged, but the space erly used to produce Product B can be rented out for $100,000 per year. How will the firm's operating income be affected by dropping Product B? A. Operating income will increase by $40,000 B. Operating income will decrease by $40,000 C. Operating income will increase by $60,000 D. Operating income will decrease by $60,000 QUESTION 43 Harrisburg, Inc. makes a component used in the production of its main product. The variable costs to make the component are $1.20 per unit, and the fixed costs are $1,300,000 per month. Another firm has offered to supply the component for $1.10 each. Harrisburg fixed costs are unavoidable, and the firm has no other use for the space currently used to make the component. What would the effect on Harrisburg's operating income be if the firm decides to outsource the 200,000 units of the component that it needs each month? A. The firm could save $20,000 per month in costs B. The firm's costs would increase by $220,000 per month C. The firm could save $1,300,000 per month in costs D. There would be no effect on operating income