Problem 1) a) What is the possible number of microstates associated with tossing a coin N times and having it come up H times heads and T times tails? b) For a series of 1000 tosses, what is the total number of microstates associated with 50% heads and 50% tails? c) How less probable is the outcome that the coin will land 40% heads and 60% tails? Solution Hi, N is number of units H is heads T is tails W is weight a) W = N! / (H! T!) b) you need to do some math here, I used a TI 83 calculator log (W) = log (1000!) 2 log (500!) = e 693 or exp (693) (it is a big number) c) log (W) = log (1000!) log (400!) log (600!) = e 673 or exp (673).

1. Problem 28
Prepare an incremental analysis in good form for each of the two cases below as support for your
decision.
Case 1
Don’s Donuts budgets the following costs for the production of 36,000 boxes of donuts next
year: Rent, $20,000; other fixed costs, $6,000; direct materials, $43,200, and direct labor,
$30,600. The normal selling price is $4.20 per box. The Duval County Police Department has
offered to pay Don’s $3.15 per box to supply them with 10,000 boxes of donuts during the year.
This will eliminate police officers from visiting donut shops in an effort to improve the image of
law enforcement personnel. Assuming that Don’s has the capacity to fill this order along with
their other production and that accepting this order will not cause problems with any of their
other customers, should Don’s Donuts accept this order? Provide a single column incremental
analysis to support your answer.
Case 2
Big Bagels makes and sells 25,000 giant bagels each month. Capacity is 28,000 bagels. The unit
cost of making one bagel at this activity level follows:
Direct material
$0.23
Fixed manufacturing overhead
0.32
Direct labor
0.11
Variable manufacturing overhead
0.14
A new retail store has offered to buy 2,200 bagels at $0.82 per bagel even though regular
customers pay $0.99 each. Fixed costs are allocated to products and are unavoidable. Prepare a
single column incremental analysis in good form to determine is Big Bagels should accept the
order for 2,200 bagels.
Explain the nature of 'allocated' fixed costs and why they are often irrelevant.
Direct material
$0.23
Fixed manufacturing overhead
0.32
Direct labor
0.11

2. Variable manufacturing overhead
0.14
Solution
1)
Incremental Revenue = 3.15 per box * 10000 boxes = 31500
Incremental costs = Variable cost / Units
= (43200+30600)/36000= 2.05
Incremental costs = 2.05*10000= 20500
Incremental profit = 31500-20500=11000
2)
Variable cost = 0.23+0.11+0.14= 0.48 per unit
INCREMENTAL REVENUE FOR ORDER (2200*0.82) = 1804
INCREMENTAL COST FOR ORDER (2200*0.48) = 1056
INCREMENTAL INCOME FOR ORDER = 748