Walsh Automobile Company fabricates automobiles.Each vehicle includes one airflow sensor,which is currently made in-house.Details of the airflow sensor fabrication are as follows: \[\begin{array} { | l | r | l | } \hline \text { Volume } & 700 & \text { units per month } \\ \hline \text { Variable cost per unit } & \$ 8 & \text { per unit } \\ \hline \text { Fixed costs } & \$ 13,000 & \text { per month } \\ \hline \end{array}\] A Japanese factory has offered to supply Walsh with ready-made units for a cost of $15 per sensor.Assume that Walsh's fixed costs could be reduced by $3000 if it outsources and that Walsh will not be able to use the excess capacity in any profitable manner.If Walsh decides to outsource,monthly operating income will ________.

A) increase by $13,000 B) decrease by $13,000 C) increase by $5600 D) decrease by $1900 A) increase by $13,000 B) decrease by $13,000 C) increase by $5600 D) decrease by $1900

Kitchen Convenience Company manufactures two products-toaster ovens and bread machines.The following data are available: \[\begin{array} { | l | r | r | } \hline & \text { Toaster Ovens } & \text { Bread Machines } \\ \hline \text { Sales price } & \$ 100 & \$ 150 \\ \hline \text { Variable costs } & \$ 40 & \$ 70 \\ \hline \end{array}\] Kitchen Convenience can manufacture six toaster ovens per machine hour and four bread machines per machine hour.Kitchen Convenience's production capacity is 1600 machine hours per month.What is the contribution margin per machine hour for bread machines?

A) $60 B) $80 C) $320 D) $480 A) $60 B) $80 C) $320 D) $480

Lampara Corporation manufactures two styles of lamps - Bedford Lamp and Lowell Lamp.The following per unit data are available: \[\begin{array} { | l | r | r | } \hline & \text { Bedford Lamp } & \text { Lowell Lamp } \\ \hline \text { Sales price } & \$ 25 & \$ 38 \\ \hline \text { Variable costs } & \$ 15 & \$ 20 \\ \hline \text { Machine hours required for one lamp } & 1 & 4 \\ \hline \end{array}\] Total fixed costs are $30,000,and Lampara can sell a maximum of 12,000 units of each style of lamp annually.Machine hour capacity is 20,000 hours per year.What is the contribution margin per machine hour for the Lowell Lamp? (Round your answer to the nearest cent.)

A) $10.00 per machine hour B) $25.00 per machine hour C) $4.50 per machine hour D) $38.00 per machine hour A) $10.00 per machine hour B) $25.00 per machine hour C) $4.50 per machine hour D) $38.00 per machine hour

Pisces Company manufactures sonars for fishing boats.Model 100 sells for $400.Pisces produces and sells 5000 units per year.Cost data are as follows: \[\begin{array} { | l | l | l | } \hline \text { Variable manufacturing } & \$ 100 & \text { per unit } \\ \hline \text { Variable selling and administrative } & \$ 6 & \text { per unit } \\ \hline \text { Fixed manufacturing } & \$ 270,000 & \text { per year } \\ \hline \text { Fixed selling and administrative } & \$ 130,000 & \text { per year } \\ \hline \end{array}\] An offer has come in for a one-time sale of 300 units at a special price of $120 per unit.The marketing manager says that the sale will not affect the company's regular sales activities,and that it will not require any variable selling and administrative costs.The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way.What is the effect of this deal on operating income?

A) Operating income increases by $400. B) Operating income increases by $1800. C) Operating income decreases by $6000. D) Operating income increases by $6000. A) Operating income increases by $400. B) Operating income increases by $1800. C) Operating income decreases by $6000. D) Operating income increases by $6000.

Misbah Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp.The following per unit data are available: \[\begin{array} { | l | r | r | } \hline & \text { Bedford Lamp } & \text { Lowell Lamp } \\ \hline \text { Sales price } & \$ 26 & \$ 36 \\ \hline \text { Variable costs } & \$ 14 & \$ 26 \\ \hline \text { Machine hours required for one lamp } & 1 & 5 \\ \hline \end{array}\] Total fixed costs are $30,000.Marketing data indicate that the company can sell up to 6000 units of the Bedford Lamp and up to 6000 units of the Lowell Lamp.Machine hour capacity is 25,000 hours per year.Which product mix will deliver the optimum operating income?

A) 6000 Bedford Lamps and 6000 Lowell Lamps B) 6000 Bedford Lamps and zero Lowell Lamps C) 6000 Bedford Lamps and 3800 Lowell Lamps D) 6000 Bedford Lamps and 1200 Lowell Lamps A) 6000 Bedford Lamps and 6000 Lowell Lamps B) 6000 Bedford Lamps and zero Lowell Lamps C) 6000 Bedford Lamps and 3800 Lowell Lamps D) 6000 Bedford Lamps and 1200 Lowell Lamps