Accounting 1

Question 1 (value of decision options, opportunity cost, sunk costs). 

You inherited a house in San Diego from a rich uncle. You need money now, so you are considering three options: 
* option A: sell the house for $310,000 
* option B: spend $75,000 on improving the house, after that sell it for $380,000.
* option C: burn the house for insurance money. The house is insured for $216,000.
Not selling the house is not a viable option.
If you sell the house (options A and B), you will have to pay realtor's fees and taxes, which amount to 8% of the selling price. (For example, if you sold the house for $100,000, the total cost of fees and taxes will be $100,000*0.08=$8,000).
If you burn the house, you'll have to hire a good lawyer to prove it was an accident. The lawyer will cost you $21,000 (you do not have to pay realtor's fees and taxes in this case). 

Required:
a) What is the value of each option? 
A= 

Question 2 (fixed/mixed/variable costs)
Generic Motors incurs three types of costs (a, b and c) in its manufacturing process. The following table presents total costs for each type for two different activity levels:

Required:
Identify whether each cost is fixed, mixed or variable?
Cost a =

Cost b =

Cost c =