Question 1

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Q1: MEC Corporation is running below its operating capacity and charges $25 per unit. To use some of the excess capacity and generate additional sales, they are looking at 2 special offers from customers. Customer A is offering to purchase purchase 1200 units at $21 each. Customer B is offering to purchase 1000 units at $23 each. Variable costs are $13 per unit and no additional fix be accepted (we cannot do both orders) and why? Q2: The shoe department of a company has revenues of $900,000; variable expenses of $270,000; direct fixed costs of $410,000; and allocated, indirect fixed costs of $320,000 in an average year. If the company eliminates this department, what would be the effect on net income? Should we eliminiate the department? Explain. Q3: Rainy Day Company manufactures two joint products. At the split-off point, they have sales values of $31 for Product 1 and $28 for Product 2. After further processing, the company can sell Product 1 for $49 and Product 2 for $30 Produ.... osts $10 per unit to process. furtherandProduct2costs$18toprocessfurther.eha......bothoftheseornatuctasosts$10perunittoprocess