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EKP purchased a raw material in bulk for $10,000. It then spent an additional $500 to package the product into smaller quantities which it can sell for $12,000. Recently, a situation has arisen in which EKP can add an additional ingredient to the individual packages and sell them for $14,000. The cost of adding the additional ingredient is $1,700. Which amounts are relevant to the decision?

$10,000 + $500, $12,000 and $14,000

$10,000 + $500, $1,700 and $14,000

$12,000, $1,700 and $14,000

$10,000, $500, $12,000, $14,000 and $1,700

Corn Crunchers has three product lines. Its only unprofitable line is Corn Nuts, the results of which appear below for 2016:

Sales	$350,000
Variable expenses	230,000
Fixed expenses	180,000
Net loss	$(60,000)

If this product line is eliminated, 30% of the fixed expenses can be eliminated. How much are the relevant costs in the decision to eliminate this product line?

$54,000

$410,000

$335,000

$284,000

Shorebucks Coffee can sell all the units it can produce of either latte or cappuccino but not both. Latte has a unit contribution margin of $45 and takes three machine hours to make and cappuccino has a unit contribution margin of $32 and takes two machine hours to make. There are 1,300 machine hours available to manufacture a product. What should Shorebucks do?

Make latte which creates $13 more profit per unit than cappuccino does.

Make cappuccino which creates $1 more profit per constraint than latte does.

Make cappuccino because more units can be made and sold than latte.

The same total profits exists regardless of which product is made.

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