1. Which of the following is the greatest concern when managers are considering the optimal product mix?

   a.maximizing revenue

   b.maximizing profit

   c.minimizing cost

   d.minimizing selling and administrative expense

2. Tine Company makes carpets. A customer wants to place a special order for 1,000 carpets in navy blue with the company logo woven in the middle, to be priced at $30 each. Normally, Tine would charge $60 per carpet for this type of order. Tine figures that yarn and backing will cost $12 per carpet, variable overhead (machining, electricity) is $5 per carpet, direct labour is $10 per carpet, and one setup will be required at $800 per setup. The setup charge costs are 100% labour. Currently, the workers needed to set up and make the carpets are working at Tine. Their wages will be paid whether or not the special order is accepted. Tines policy is to avoid layoffs to the extent possible. Refer to the Figure. Which of the following is a cost of the special order in addition to yarn and backing?

   a.variable overhead

   b.direct labour

   c.depreciation on machinery

   d.setup costs