Coffee shop owner: a large number of customers will pay at least the fair market value for a cup of coffee, even if there is no formal charge. some will pay more than this out of appreciation of the trust that is placed in them. and our total number of customers is likely to increase. we could therefore improve our net cash flow by implementing an honor system in which customers pay what they wish for coffee by depositing money in a can. manager: we're likely to lose money on this plan. many customers would cheat the system, paying a very small sum or nothing at all. which of the following, if true, would best support the owner’s plan, in light of the manager’s concern? (a) the new system if implemented, would increase the number of customers.(b) by roasting its own coffee, the shop has managed to reduce the difficulties and cost of maintaining an inventory of freshly roasted coffee.(c) many customers stay in the cafe for long stretches of time.(d) the shop makes a substantial profit from pastries and other food bought by the coffee drinkers.(e) no other coffee shop in the area has such a system.

P8-4b dropping unfavorable division based on the following analysis of last year's operations of groves, inc., a financial vice president of the company believes that the firm's total net income could be increased by $160,000 if its design division were discontinued. (amounts are given in the thousands of dollars.) required provide answers for each of the following independent situations: a. assuming that total fixed costs and expenses would not be affected by discontinuing the design division, prepare an analysis showing why you agree or disagree with the vice president. b. assume that the discontinuance of the design division will enable the company to avoid 30% of the fixed portion of cost of services and 40% of the fixed operating expenses allocated to the design division. calculate the resulting effect on net income. c. assume that in addition to the cost avoidance in requirement (b), the capacity released by discontinuance of the design division can be used to provide 6,000 new services that would have a variable cost per service of $60 and would require additional fixed costs totaling $68,000. at what unit price must the new service be sold if groves is to increase its total net income by $180,000?