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2. Assume Yellow Manufacturing Inc. has the following original data for the period: Selling price per unit $55.00 Variable cost per unit $18.00 Total fixed costs $55,500 Income from operations is currently $18,500. If management decides to increase the variable cost per unit to $20 and believes sales will increase to 2,300 units as a result of this, what is the impact on net income a) $6,500 decrease b) $52,500 increase c) $52,500 decrease d) $6,500 increase 3. In the reading, Service Company Insight - San Diego Zoo, funds were able to be allocated towards preventing an infectious bird disease using which means of financial planning? a) 12-month rolling forecast b) Leeching shares of common stock c) Creating allowance for disaster recovery d) Monthly budget reforecast 4. Fine Diamond Brothers mine, cut, and polish diamonds. After the diamonds are initially cut and polished, the company can sell the diamonds as is to wholesalers, or they can further cut the diamonds into special shapes for ring settings. The selling price for the wholesale diamonds are $2,300 per diamond while the selling price of the specially shaped diamonds are $3,000 per diamond. The cost of further shaping the diamonds for rings is $805. Should Fine Diamond Brothers sell the diamonds as is to wholesalers or further shape the diamonds for rings? a) Further shape diamonds for ring settings b) Sell diamonds as is to wholesalers c) There is not enough information to decide 5. A manager should be careful when trying to improve ROI because: a) Eliminating excess inventory is never a resourceful strategy b) Cutting down on vital activities such as maintenance and quality materials, could hurt the company in the long term c) If costs are being decreased to due the elimination of waste and inefficiencies, this is not beneficial. d) It requires the selling price to products to be decreased which hurt the company's total sales revenues. 6. As described in Management Insight - Honda, what advantage does Honda's manufacturing processes have compared to competitors? a) Extensive knowledge of consumers needs through surveys and field studies b) Factories located near many major metropolitan locations to bring the finished product closer to the customer c) The ability to adapt to changing condition and demand d) Higher customization to reach the needs of more customers. 7. Wonderous Baking Co. had the following costs during the period: Shipping Costs: $3,200 Direct Material: $14,300 Direct Labor: $18,900 Indirect Materials: $4,400 Indirect Labor: $2,100 Bakery Heating and Lighting: $5,600 Insurance on Bakery: $800 Advertising: $8,000 Calculate Wonderous Baking Co.'s manufacturing costs. a) $33,200 b) $57,300 c) $46,100 d) $39,700

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