Old-Fashion Flavors is a local ice cream shop.The company currently is showing an operating loss,as evidenced by the income statement below:

\begin{array} { | c | r | } \hline \text { Sales } & \$ 75,000 \\\hline \text { Costs: } & \\\hline \text { Food supplies } & 20,000 \\\hline \text { Labor } & 16,000 \\\hline \text { Utilities } & 4,000 \\\hline \text { Rent } & 12,000 \\\hline \text { Other } & 4,000 \\\hline \text { Manager's salary } & \underline{25,000} \\\hline \text { Total Costs } & 81,000 \\\hline \text { Operating Profits (Losses) } & \underline { ( \$ 6,000 ) } \\\hline\end{array}

The President of the company is considering adding sandwiches to the menu.Sales will be expected to increase by $60,000.The cost of sandwich supplies would be $30,000.Labor costs would increase 40% and other costs 10%.The current manager will continue to manage the operation.

a.Prepare a quantitative analysis of the decision to add sandwiches to the menu.
b.What qualitative considerations should the company consider in this decision?

When Comparing Activity-Based Costing with Conventional Costing Methods,which of the Following

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