ThePrinter Division ofOffice ProductsManufacturing reported the following financial results for the current year:

Sales	$1,000,000
Printer Operating Expenses	$800,000
Allocated Corporate Expenses	$300,000
Net Loss	($100,000)

The President of Smithtown wants to close thePrinter Division. She has given you the above information. What is your best recommendation based upon the information presented?

	a.	This is a good idea because thePrinter Division is not covering total expenses.
	b.	This is a good idea because the Printer Division has a net loss.
	c.	This is not a good idea because the Printer Division has a $1,000,000 in sales.
	d.	This is not a good idea because the Printer Division can cover its Operating Expenses.

Segment information for Mango Tango:

Revenue from Tango Sales	$500,000
Salaries for Mango Tango Workers	($100,000)
Direct Material	(300,000)
Sunk Costs (equipment depreciation	($75,000)
Allocated company-wide facility sustaining costs	($50,000)
Net Loss	($25,000)

1. Gourmet Sorbet is considering eliminating its Mango Tango line. The amount of relevant costs in this decision are:

	a.	$400,000.
	b.	$475,000.
	c.	$525,000.
	d.	$550,000.

Segment information for Toyco follows:

	Doll	Sport	Game
Sales	$126,000	$202,000	$117,000
Cost of Goods Sold	$100,000	$120,000	$75,000
Sales Commissions	$6,300	$10,100	$5,850
Contribution Margin	$19,700	$71,900	$36,150
General Fixed Op. Expense***	$20,000	$20,000	$20,000
Advertising Costs***	$1,000	$4,000	0
Net Income	($1,300)	$47,900	$16,150

*** General Fixed Op Expense is allocated Presidents Salary; Advertising cost is specific to the department.

If the Doll department were eliminated, what would the effect on profitability be?

	a.	The doll department should be eliminated.
	b.	Net Income increases $1,300.
	c.	Net Income increases $18,700.
	d.	Net Income decreases $18,700.

Segment information for Toyco follows:

	Doll	Sport	Game
Sales	$126,000	$202,000	$117,000
Cost of Goods Sold	$100,000	$120,000	$75,000
Sales Commissions	$6,300	$10,100	$5,850
Contribution Margin	$19,700	$71,900	$36,150
General Fixed Op. Expense***	$20,000	$20,000	$20,000
Advertising Costs***	$1,000	$4,000	0
Net Income	($1,300)	$47,900	$16,150

*** General Fixed Op Expense is allocated Presidents Salary; Advertising cost is specific to the department. Toyco is considering getting out of the game business. What effect would eliminating the Game Department have on profitability?

	a.	Net Income would increase $16,150.
	b.	Net Income would decrease $16,150.
	c.	Net Income would increase $36,150.
	d.	Net Income would decrease $36,150.

Cost information for Mary's Marvels Candy Division follows:

Candy Advertising	$23,000
Supervisor Salary	40,000
Book Value of Building	28,000
Taxes on Building	2,000
Allocated Facility Wide Costs	22,000

Mary is considering eliminating the Candy Division. If it is eliminated, theCandy manufacturing building will be sold to another manufacturer. What is the total unavoidable cost in this decision?

	a.	$22,000
	b.	$50,000
	c.	$71,000
	d.	$142,000

Information on the replacement of the Slurp Machine at Fast Gas follows:

	Old Machine	New Machine
Cost	$6,000	$7,000
Accumulated Depreciation	$3,000
Book Value	$3,000
Market Value	$2,000	$7,000
Salvage Value (2 yrs)	$1,000
Salvage Value (7 yrs)		$1,505
Operating Expenses per year	$32,000	$16,000

Due to new "Froth Technology", the new Slurp Machine reduces annual operating costs in half. Operating costs include electricity, water, syrup and cups.

	a.	Fast Gas should buy the new machine immediately.
	b.	Fast Gas should pass on the new machine.
	c.	Fast Gas should examine unit level costs, batch level costs, product level costs and facility level costs.
	d.	Fast Gas should not buy the New Machine as it will take a loss of $1,000 on the Old Machine.