Bricktan Incorporated makes three products, Basic, Classic, and Deluxe. The maximum Bricktan can sell is 724,000 units of Basic, 492,000 units of Classic, and 124,500 units of Deluxe. Bricktan has limited production capacity of 1,008,000 machine hours. Machine hours per unit are as follows: Basic, 1 hour; Classic, 1.25 hours; and Deluxe 2.5 hours. Contribution margin per unit is $15 for Basic, $25 for Classic, and $55 for Deluxe. What is the most profitable sales mix for Bricktan Incorporated?

Multiple Choice

• 72,400 Basic, 492,000 Classic and 268,800 Deluxe.

• 168,000 Basic, 124,500 Classic and 268,800 Deluxe.

• 367,500 Basic, 268,800 Classic and 124,500 Deluxe.

• 622,500 Basic, 0 Classic and 124,500 Deluxe.

• 81,750 Basic, 492,000 Classic and 124,500 Deluxe.

Riener Hospital has an x-ray machine with a book value of $60,000 and a remaining useful life of three years. At the end of the three years the equipment will have a zero-salvage value. Reiner can sell the old machine now for $32,000 and can purchase a new machine for $145,000. The old machine has variable manufacturing costs of $50,000 per year. The new machine will reduce variable manufacturing costs by $27,000 per year over the three-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is:

Multiple Choice

• $32,000 decrease

• $76,000 increase

• $18,000 decrease

• $52,000 increase

• $22,000 increase