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Part 1:

The operations of Blink Corporation are divided into the Adams Division and the Carter Division. Projections for the next year are as follows:

	Adams Division		Carter Division		Total
Sales	$	565,000	$	341,000	$	906,000
Variable costs		198,500		156,500		355,000
Contribution margin	$	366,500	$	184,500	$	551,000
Direct fixed costs		169,000		141,000		310,000
Segment margin	$	197,500	$	43,500	$	241,000
Allocated common costs		85,000		64,000		149,000
Operating income (loss)	$	112,500	$	(20,500)	$	92,000

Operating income for Blink Corporation as a whole if the Carter Division were dropped would be:

$133,000.

$92,000.

$112,500.

$48,500.

Part 2:

The MNK Company has gathered the following information for a unit of its most popular product:

Direct materials	$	6.80
Direct labor		3.40
Overhead (40% variable)		5.40
Cost of manufacture		15.60
Desired markup (50%)		7.80
Target selling price		23.40

The above cost information is based on 4,000 units. A foreign distributor has offered to buy 1,000 units at a price of $18.40 per unit. This special order would not disturb regular sales. Variable shipping and other selling expenses would be an additional $1.40 per unit for the special order. If the special order is accepted, MNK's operating profits will increase by:

$1,400.

$4,640.

$2,240.

$2,800.

$6,040.

Part 3:

The AZ Company manufactures kitchen utensils. The company is currently producing well below its full capacity. The BV Company has approached AZ with an offer to buy 21,200 utensils at $0.81 each. AZ sells its utensils wholesale for $0.91 each; the average cost per unit is $0.89, of which $0.42 is fixed costs. If AZ were to accept BV's offer, what would be the increase in AZ's operating profits?

$3,604.

$7,208.

$14,416.

$18,020.

AZ's operating profits will not increase as a result of accepting the special order.

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