PART 1

The

Table

Clock Company sells a particular clock for

$40.

The variable costs are

$19

per clock and the breakeven point is

210

clocks. The company expects to sell

260

clocks this year. If the company actually sells

400

clocks, what effect would the sale of additional

140

clocks have on operating income? Explain your answer.

The sale of an additional 140 clocks would	(1)	operating income by the amount of
(2)	The total effect would amount to			.

(1)

increase

decrease

(2)

the additional contribution margin.

the income that exceeds fixed costs.

the increase in units sold.

the revenue that exceeds the breakeven point.

PART 2

Chase

Street Barber Shop pays

$35

per month for water for the first

10,000

gallons and

$2.25

per thousand gallons above

10,000

gallons. Calculate the total water cost when the barber shop uses

6,000

gallons,

11,000

gallons, and

14,000

gallons.

(Do not round interim calculations. Round your final answers to the nearest cent.)

Usage	Total Water Cost
6,000 gallons
11,000 gallons
14,000 gallons