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3.

Quiz Company provided the following information related to its two product lines.

	Product 1	Product 2
Units sold	10,000	20,000
Price per unit	$20	$15
Variable cost per unit	10	12
Direct fixed costs	35,000	75,000

Common fixed costs total $45,000. Quiz Company allocated 1/3 of the common fixed costs to Product 1 and 2/3 of the common fixed costs to Product 2. All direct fixed costs will be avoidable if a product line is dropped.

Assume that Product 1 and Product 2 are independent of one another.

Determine the amount that total operating income will increase (decrease) if Product 2 is dropped.

Note: Give your answer using dollar signs and commas but no decimal points (cents). Express negative numbers in parentheses.

Example: $12,345 or $(12,345)

4,

Quiz Company provided the following information related to its two product lines.

	Product 1	Product 2
Units sold	10,000	20,000
Price per unit	$20	$15
Variable cost per unit	10	12
Direct fixed costs	35,000	75,000

Common fixed costs total $45,000. Quiz Company allocated 1/3 of the common fixed costs to Product 1 and 2/3 of the common fixed costs to Product 2. All direct fixed costs will be avoidable if a product line is dropped.

Assume that Product 1 and Product 2 are complements so that if Product 2 is dropped sales of Product 1 will decrease 10%.

Determine the amount that total operating income will increase (decrease) if Product 2 is dropped.

Note: Give your answer using dollar signs and commas but no decimal points (cents). Express negative numbers in parentheses.

Example: $12,345 or $(12,345)

5.

Quiz Company produces two products from a joint process: Product A and Product B. Joint costs total $10,000 per week. Product A sells at the split-off point for $12,000. Product B sells at the split-off point for $15,000. A customer has asked Quiz Company to process Product B further to create Product C. Product C will sell for $25,000. Additional processing costs Product B into Product C will be $5,000.

Determine the amount that operating income will increase (decrease) of Quiz Company processes Product B into Product C.

Note: Give your answer using dollar signs and commas but no decimal points (cents). Express negative numbers in parentheses.

Example: $12,345 or $(12,345)

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