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1 . Palmer ' s Gourmet Chocolates produces and sells assorted boxed chocolates . The unit selling price is $ 50 per box , unit variable costs are $ 25 per box , and total fixed costs for the company are $ 2,000 .
1a . How many boxes of chocolates must Palmer ' s Gourmet Chocolates sell to break even ?
1b . What are breakeven sales in dollars ?
2 . Extreme Sports received a special order for 1,000 units of its extreme motorbike at a selling price of $ 250 per motorbike . Extreme Sports has enough extra capacity to accept the order . No additional selling costs will be incurred . Unit costs to make and sell this product are as follows : direct materials , $ 100 ; direct labor , $ 50 ; variable manufacturing overhead , $ 14 ; fixed manufacturing overhead , $ 10 . 2a . List the relevant costs for the decision of whether or not to accept the special order . 2b . What will be the change ( difference ) in operating income if Extreme Sports accepts the special order ? c . Should Extreme Sports accept the special order ? Why or why not ?
3 . Totally Technology manufactures two product lines : Cameras and Video Recorders . The company ' s product line income statement follows : Management is considering discontinuing the Video Recorder product line . Accountants for the company estimate that discontinuing the Video Recorder line will decrease fixed cost of goods sold by $ 10,000 and fixed marketing and administrative expenses by $ 4,000 .