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  3. 1. a company produces two kinds of hammers: one wi

1. A company produces two kinds of hammers: one with longer handles and one with...

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1. A company produces two kinds of hammers: one with longer handles and one with shorter handles. The longer hammer uses better materials and has a better design for hand support. During the past year, 200,000 shorter hammers and 50,000 longer hammers were produced and sold. Fixed costs amount to $1,000,000. If the shorter hammers were dropped from production, $360,000 of the fixed costs would be avoided. If the longer hammers were dropped, $180,000 of the fixed costs would be avoided. Shorter Longer Variable expenses/unit $80 $172 Sales price/unit $88 $180 The contribution margin of the shorter and longer hammers, respectively is a. 5400,000/81 600,000 c. $1,600,000/88,600,000 b. $1,240,000/220,000 d. 1,600,000/$400,000 2. If the company stops producing the longer hammer, what will be the effect on the company's income? a. Decrease by $400,000 c. Decrease by $1,600,000 6. Decrease by $220,000 d. Decrease by $1,240,000 3. If the company stops producing the shorter hammer, what will be the effect on the company's income? a. Decrease by $400,000 c. Decrease by S1,600,000 6. Decrease by $220,000. Decrease by $1.240,000

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