1. When determining which product to produce when a resource constraints exist and the company wants to maximum profit, a company should:
   1. Select the product with the largest contribution margin
   2. Select the product with the largest gross margin
   3. Select the product with the largest contribution margin ratio
   4. Select the product with the largest contribution margin per unit of the constrained resource

2. Which of the following is an example of a sunk cost when a Company is deciding if they should sell their delivery truck?
   1. A company purchased the delivery truck in 2015 for $15,000
   2. On an annual basis, maintenance of $3,000 is incurred on the delivery truck
   3. Annually, the company spends $5,000 on gas for the delivery truck
   4. Insurance for the delivery truck is $1,400 per year

3. A value chain includes all of the following except:
   1. Product design
   2. Assembly of the product
   3. Transportation of the product
   4. Hiring new assembly workers

4. VIP Products was approached for a special order of t-shirts for ABC Conference. The direct material cost per t-shirts is $1.25, direct labor of $0.65, and overhead of $0.80, of which $0.40 is variable. ABC Conference wants to purchase 20,000 t-shirts for $2.50 each. The order would not require any selling administrative costs. The setup fee for the screen printing machine would be $500, which would be paid for by BIP Products. What is the amount of the increase to VIP Products net operating income if they accept the special order?

Answer:____________

5. Michaels Products can purchase 10,000 units of Part A from a supplier for 5$ per unit. If the company decides to purchase Part A, it can use the space to make another product which will earn $50,000 in segment margin each year. Should Michaels continue to make the part or but it? Enter in Yes if they should continue to make the part or No if they should stop making the part/buy it.

Answer:____________

6. Stellar Industries has the opportunity to purchase the wheels for their baby strollers product. The cost of purchasing 9,000 wheels is $49,500, which will produce 3,000 strollers as each stroller requires 3 wheels. Currently, the company manufactures the wheel themselves with the following costs per unit: direct material $2, direct labor $2.25, manufacturing overhead $1.72, of which $0.80 is variable manufacturing overhead. There is no dedicated manager or employees to wheel production. The company would not use the space for any other type of production if they stopped producing wheels. What is the financial advantage or financial disadvantage to purchasing the wheels?
   1. $4,050 Advantage
   2. $4,050 Disadvantage
   3. $4,500 Advantage
   4. $4,500 Disadvantage

7. Grace Mountain Bikes received a special order for 50 cruiser bikes for a city bike share program at a sales price of $240 per bike. The cruiser bike features would be the same as a standard cruiser bike, with the exception of unique stenciling on the bike. The total cost of the graphic design and printing of the stencils would be $1,200. The standard costs of a cruiser bike include: $92 in direct materials, $18 in direct labor, and $22 in manufacturing overhead of which $13 is variable. What is the financial advantage or financial disadvantage for this special order?
   1. $4,650 Advantage
   2. $4,200 Advantage
   3. $5,850 Advantage
   4. $5,400 Advantage