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Healthy Hearth specializes in lunches for the health conscious.The company produces a small selection of lunch offerings each day.The menu selections may vary from day to day, but Healthy Hearthcharges the same price per menu selection because it adjusts theportion sizes according to the cost of producing the selection.Healthy Hearth currently sells 5,000 meals per month. Variablecosts are $3 per meal, and fixed costs total $5,000 per month. Agovernment agency has recently proposed that Healthy Hearth provide1,000 meals next month for senior citizens at $3.50 per meal.Volunteers will deliver the meals to the senior citizens at nocharge.
Required:
Suppose Healthy Hearth has sufficient idle capacity to accommodate the government order for next month. What will be the impact on Healthy Hearth's operating income if it acceptsthis order?
Suppose that Healthy Hearth would have to give up regular sales of 500 meals, at a price of $4.50 each, to accommodate the government order for next month. What will be the impact on Healthy Hearth's operating income if it accepts the government order?
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Barbara and Bill formed an equal partnership, B&B, a general partnership, on January 1, 2011. Barbara contributed $100,000 in exchange for her one-half interest.
Lupe and Rodrigo, father and son, each own 50% of the stock outstanding of Heron Corporation (Eof $400,000). During the current year, Heron redeems all of Lupe's shares for $250,000. The transaction cannot qualify as a complete termination redempt..
Select two user groups of financial statements and discuss their reasons for using financial statement analysis. Distinguish between operation management and financial management.
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