Answer all questions fully, showing all work:

$1.$ Tara$$s Treasures sells Jewelry at $$80$ per item. Her Variable Costs are $$40$ per item and her Fixed Costs are $$800,000.$

a$.$ What is her Breakeven Units?

b$.$ What is her Breakeven Revenue?

c$.$ Prepare a Contribution Margin Income Statement Assuming she sells the Breakeven Units.

$2.$ Tara$$s Treasures operates $3$ departments: Men$$s Women$$s & Accessories

MEN$$s Women$$s Accessories Total

Sales Revenue $$110,000$ $$74,000$ $$80,000$ $$264,000$

Variable Costs $$50,000$ $$50,000$ $$60,000$ $$160,000$

Fixed Costs $$40,000$ $$20,000$ $$30,000$ $$90,000$

Total Expenses $$90,000$ $$70,000$ $$90,000$ $$250,000$

Operating Inc$/$Loss $$20,000$ $$4,000($$$10,000)$ $$14,000$

Tara is trying to decide if she should DROP$/$CLOSE the Accessories Department....

The $$90,000$ FIXED Costs would need to be allocated $2/3$s to MEN$$s and $1/3$ to Women$$s$...$

Should she close ACCESSORIES??

$3.$ Gillian$$s Gems has an INVENTORY of old Jewelry of $500$ units that has a COST of $$50,000.....$Gillian has a decision to make...and asks you for your advice....

a$.$ Should she invest an additional $$25,000$ in the units....and then sell them for $$30,000?$

b$.$ Should she sell the $500$ Units $$as is$$ for $$8,000?$

What advice would you give her and why.

$4.$ A new customer approaches your company with a SPECIAL ORDER: They would like to purchase $100,000$ cookies for $$\mathrm{.}48($CENTS$)$ per Cookie....the Cookies cost $$\mathrm{.}80($Cents$)$ to make and usually sell for $$1\mathrm{.}20$ per Cookie:

Variable Costs:

Direct Materials $$\mathrm{.}20$

Direct Labor $$\mathrm{.}10$

Manufacturing Overhead $$\mathrm{.}15$

Fixed Costs $$\mathrm{.}35$

Total Costs $$\mathrm{.}80$

Should the Special Order be Accepted...assuming they have excess capacity...and the current customers will not be made aware of the Special Order Price.......or Rejected and WHY?

$5.$ Tara$$s Treasures currently manufactures her product for $$30$ per unit:

Variable Costs $$22$

Fixed Costs $$8$

Total $$30$

Tara is approached by a supplier who offers to make her product for $$25$ per unit, Should Tara agree assuming she cannot eliminate any of the Fixed Costs?

If Tara can eliminate $$6$ of the Fixed Costs, should she now accept the offer to have her inventory made by another company instead of making the product herself?

$6.$ Winsome$$s Wish Company sells games for $$55$ per game. Her Variable Costs are $$35$ per game and her Fixed Costs are $$900,000.$ If Winsome has a Target Profit $$550,000,$ how many units must she sell in order to meet the Target Profit goal?

$7.$ Tara$$s Treasures sells Jewelry at $$75$ per item. Her Variable Costs are $$40$ and her Fixed Costs are $$700,000.$ If Tara sells $24,500$ units, what is her Margin of Safety?