State University is considering hiring an outside company for its grounds maintenance.In this regard, State University has received a bid from Mackin Services.Mackin states that its bid of $410,000 will cover all services and planting materials required to "keep State University's grounds in a condition comparable to prior years." State University's cost for grounds maintenance in the preceding year was $412,000 as follows: \[\begin{array} { l r } \text { Salary of three full-time gardeners } & \$ 295,000 \\ \text { Plant materials } & 80,000 \\ \text { Fertilizer } & 9,000 \\ \text { Fuel } & 8,000 \\ \text { Depreciation of other equipment } & 5,000 \\ \text { Depreciation of tractor and mowers } & 15,000 \\ \text { Total } & \$ 412,000 \end{array}\] If State University hires Mackin, it will be able to sell its other equipment for $30,000, and the three gardeners will be laid off.What is the first year financial impact of hiring the outside company for its grounds maintenance?

A) $13,000 additional cost B) $2,000 savings C) $17,000 savings D) $30,000 savings A) $13,000 additional cost B) $2,000 savings C) $17,000 savings D) $30,000 savings

State University is considering hiring an outside company for its grounds maintenance.In this regard, State University has received a bid from Mackin Services.Mackin states that its bid of $410,000 will cover all services and planting materials required to "keep State University's grounds in a condition comparable to prior years." State University's cost for grounds maintenance in the preceding year was $412,000 as follows: \[\begin{array} { l r } \text { Salary of three full-time gardeners } & \$ 295,000 \\ \text { Plant materials } & 80,000 \\ \text { Fertilizer } & 9,000 \\ \text { Fuel } & 8,000 \\ \text { Depreciation of other equipment } & 5,000 \\ \text { Depreciation of tractor and mowers } & 15,000 \\ \text { Total } & \$ 412,000 \end{array}\] If State University hires Mackin, it will be able to sell its other equipment for $30,000, and the three gardeners will be laid off.What will savings be in the second year?

A) $13,000 additional costs B) $2,000 savings C) $7,000 savings D) $30,000 savings A) $13,000 additional costs B) $2,000 savings C) $7,000 savings D) $30,000 savings

Soren Company makes two products from a joint input that have the following information: $\begin{array}{rrrrr}&&\text { Sales Value }&\text {Total Additional}&\text { Sales Value }\\ &\text { Units } & \text { Per Unit } & \text { Processing } & \text { Per Unit After }\\ &\text { Produced} & \text { At Split-Off }& \text { Costs} & \text { Additional Processing }\\\hline \text { Product A } & 40,000 & \$ 10 & \$ 400,000 & \$ 15 \\ \text { Product B } & 150,000 & 4 & 300,000 & 7 \end{array}$ The joint cost incurred to produce the two products to the split-off point is $600,000.How much joint cost should be allocated to Product A using the relative sales value at split-off as the allocation method?

A) $600,000 B) $126,316 C) $400,000 D) $240,000 A) $600,000 B) $126,316 C) $400,000 D) $240,000

Mel's Diner owns a single restaurant, which has a cantina primarily used to seat patrons while they wait on their tables.The company is considering eliminating the cantina.Segmented contribution income statements are as follows and fixed costs applicable to both segments are allocated on the basis of square footage. $\begin{array}{lrrr}&\text { Restaurant }& \text { Cantina } &\text { Total }\\ \text { Sales } & \$ 800,000 & \$ 200,000 & \$ 1,000,000 \\ \text { Variable costs } & 475,000 & 160,000 & 635,000 \\ \text { Direct fixed costs } & 50,000 & 15,000 & 65,000 \\ \text { Allocated fixed costs } & 212,500 & 37,500 & 250,000 \\ \text { Net income } & \$ 62,500 & (\$ 12,500) & \$ \$ 50,000 \end{array}$ What effect will occur if Mel's Diner eliminates the cantina if there is no effect on restaurant sales?

A) Net income will increase by $12,500. B) Net income will decrease to $37,500. C) Net income will decline by $25,000. D) Net income will be $62,500. A) Net income will increase by $12,500. B) Net income will decrease to $37,500. C) Net income will decline by $25,000. D) Net income will be $62,500.