The following information relates to the Magna Company for the upcoming year, based on 402,000 units.

	Amount				Per Unit
Sales	$	14,472,000			$	36.00
Cost of goods sold		8,442,000				21.00
Gross margin		6,030,000				15.00
Operating expenses		562,800				1.40
Operating profits	$	5,467,200			$	13.60

The cost of goods sold includes $1,460,000 of fixed manufacturing overhead; the operating expenses include $126,000 of fixed marketing expenses. A special order offering to buy 76,000 units for $21.15 per unit has been made to Magna. Fortunately, there will be no additional operating expenses associated with the order and Magna has sufficient capacity to handle the order. How much will operating profits be increased if Magna accepts the special order?

Multiple Choice

• $130,200.

• $167,700.

• $205,200.

• $230,200.

Lafferty Corporation is a specialty component manufacturer with idle capacity. Management would like to use its unused capacity to generate additional profits. A potential customer has offered to buy 6,380 units of component Rocket. Each unit of Rocket requires 8 units of material CES4 and 6 units of material XES7. Data concerning these two materials follow:

Material	Units in Stock				Original Cost Per Unit				Current Market Price Per Unit				Disposal Value Per Unit
CES4		50,420			$	4.16			$	4.25			$	3.46
XES7		32,860			$	9.66			$	10.50			$	9.25

Material CES4 is in use in many of the company's products and is routinely replenished. Material XES7 is no longer used by the company in any of its normal products and existing stocks would not be replenished once they are used up. What would be the relevant cost of the materials, in total, for purposes of determining a minimum acceptable price for the order for product Rocket? (CIMA adapted)

Multiple Choice

• $621,881

• $616,610

• $569,680

• $577,785

Zantaq Inc. has 5,530 machine hours available each month. The following information on the company's three products is available:

	Bookcases				Chairs				Side Tables
Contribution margin per unit	$	54.00			$	44.00			$	20.50
Machine hours per unit		3				2				1

The market demand is limited to 2,130 units of each of the three products. What is the maximum possible contribution margin that Zantaq could make in any month?

Multiple Choice

• $154,255.

• $119,755.

• $116,255.

• $124,255.

The Tire Division of Traker Company produces tires for off-road sport vehicles. One-third of Tire's output is sold to an internal division of Traker; the remainder is sold to outside customers. Tire's estimated operating profit for the year is:

	Internal				Outside
Sales	$	297,000			$	472,000
Variable costs		224,200				448,400
Fixed costs		39,000				78,000
Operating profits	$	33,800			$	-54,400
Unit sales		11,800				23,600

The internal division has an opportunity to purchase 11,800 tires of the same quality from an outside supplier on a continuing basis. The Tire Division cannot sell any additional products to outside customers. What is the minimum selling price that Tire should accept from the internal division?

Multiple Choice

• $19.00.

• $22.00.

• $24.00.

• $95.00.