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introducing a new hospital bed similar to Deluxe that will sell for $4,000. Management believes it must lower the price to compete.

Marketing believes that the new price will increase sales by 25% a year.

The plant manager thinks that production can increase by 25% with the same level of fixed costs. The company currently sells all the Deluxe beds it can produce. Question 1: What is the annual operating income from Deluxe at the current price of $5,000? Question 2: What is the annual operating income from Deluxe if the price is reduced to $4,000 and sales in units increase by 25%? Sales (25,000 x $4,000) $100,000,000 (TCO 7) Grace Greeting Cards Incorporated is starting a new business venture and are in the process of evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: ∙ Sixteen times each year, a new card design will be put into production. Each new design will require $600 in setup costs. 4. (TCO 8) Sportswear Company manufactures socks. The Athletic Division sells its socks for $6 a pair to outsiders. Socks have manufacturing costs of $2.50 each for variable and $1.50 for fixed. The division's total fixed manufacturing costs are $105,000 at the normal volume of 70,000 units. The European Division has offered to buy 15,000 socks at the full cost of $4. The Athletic Division has excess capacity and the 15,000 units can be produced without interfering with the current outside sales of 70,000. The 85,000 volume is within the division's relevant operating range. Explain whether the Athletic Division should accept the offer. Support your decision showing all calculations. (Points: 25) Question 1. 1. (TCO 2) Russell Company has the following projected account balances for June 30, 20X9:…..Prepare a budgeted income statement AND a budgeted balance sheet as of June 30, 20X9. Russell Company Income Statement Question 2. 2. (TCO 5) Steven's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe, sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average production run of 5,000 units. It normally has four production runs a year, with $600,000 in setup costs each time. Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital bed similar ……..? (Points : 25) Question 3.