Solutions for Problems in Chapter 4 amazonaws com
Chapter 4 Relevant Costs for Nonroutine Operating Decisions MULTIPLE CHOICE QUESTIONS 4.13. Ans: C 4.14. Ans: B 4.15. Ans: D 4.16. Ans: A 4.17. Ans: B
EXERCISES 4.18 A. Savings if decision is to make $ 6 B. Savings if decision is to buy $14 4.20 A. Q = 563 snowboard B. $245 / snowboard C. Incremental profit for 200 snowboards = 0 4.21 A. 125 batches of Dip and 50 batches of Soft. B. Total CM is $8,250 C. Mixing - $0.75 / minute Baking - $0.875 / minute D. mixing and baking E. $35 per batch to $75 4.22 B. $4.40 per pound for more fish.
4-2
Cost Management
4.23 A. Contribution margins per hour HBM = ($49 – $5)*20 = $880 HBM2 = ($29 – $2.50)*30 = $795 HBM3 = ($29 – $2.50)*45 = $1,192.50 B. First sell HBM3, then HBM, and then HBM2. C. up to $795 per hour 4.24 A. Produce 15 batches of Fancy Flight and 30 batches of Multigrain B. Mixing and sterilization are binding. C. Packaging and sterilization are binding. 4.25 C. The minimum acceptable price = $0.58. 4.26 A. The minimum price = $0.80 per brownie. 4.27 B. Saguaro should buy C. X = 32,500 systems 4.28 C. Minimum price for Premium = $10,000 for the order. 4.29 A. BE = $780,392 B. BE units = 500 units 4.30 A. Premium then Royal then Regular C. Q = 121 lbs
PROBLEMS 4.32 A. The firm should make the tubes B. Maximum purchase price = $1.70 C. The company should purchase the tubes D. The company should make 100,000 tubes and purchase 25,000 4.33 A. 18,000 hours per year of idle capacity. B. Minimum acceptable price $5.60 C. Contribution margin per case = $1.25 per case. Advantage of accept over reject $ 6,000 D. Jazzy should accept only the Star-Mart order
Chapter 4: Relevant Costs for Nonroutine Operating Decisions 4.34 A. 1. Incremental cost: $30,000 2. Full cost: $30,550 3. Opportunity cost $3,350 B. Differential income in favour of the order 4.35 A. B. E. F.
$ 1,650
The domestic plant should not be closed. wages would need to be $0.30 per hour Domestic plant - sweatshirts, and the foreign plant - jackets. Produce the shirts domestically
4.36 B. Total incremental cost is $145,000 D. Falco should insource. 4.38 A. Produce internally B. Buy form supplier 4.39 A. Product E = 2,000 units Product D = 1,500 units Product B = 7,500 units Product C = 6,800 units Product A = 0 units B. TC = $10,000 + $25,000*Q D. Pretax loss $ (14,300) E. Pretax income $ 45,000 4.41 A. Meals CM = $1.5 Cleaning CM = $4.80 Health department CM = $2.50 B. Estimated deficit $(33,000) C. Estimated surplus $ 1,600 D. Estimated surplus $ 1,000
BUILD YOUR PROFESSIONAL COMPETENCIES 4.43 Integrating Across the Curriculum-Finance A. Option 1 Profit: = £640,000*R $ per £ - $600,000
4-3
4-4
Cost Management Option 2 Profit: = £320,000*R $ per £ - $94,000 Option 3 Profit: If R$2.1875: = £640,000*R $ per £ - $630,000 B. C. D. F.
R = 2.16875 R = 2.1125 R = 2.140625 Profit lost $ 30,000
EXERCISES 4.18 A. Savings if decision is to make $ 6 B. Savings if decision is to buy $14 4.20 A. Q = 563 snowboard B. $245 / snowboard C. Incremental profit for 200 snowboards = 0 4.21 A. 125 batches of Dip and 50 batches of Soft. B. Total CM is $8,250 C. Mixing - $0.75 / minute Baking - $0.875 / minute D. mixing and baking E. $35 per batch to $75 4.22 B. $4.40 per pound for more fish.
4-2
Cost Management
4.23 A. Contribution margins per hour HBM = ($49 – $5)*20 = $880 HBM2 = ($29 – $2.50)*30 = $795 HBM3 = ($29 – $2.50)*45 = $1,192.50 B. First sell HBM3, then HBM, and then HBM2. C. up to $795 per hour 4.24 A. Produce 15 batches of Fancy Flight and 30 batches of Multigrain B. Mixing and sterilization are binding. C. Packaging and sterilization are binding. 4.25 C. The minimum acceptable price = $0.58. 4.26 A. The minimum price = $0.80 per brownie. 4.27 B. Saguaro should buy C. X = 32,500 systems 4.28 C. Minimum price for Premium = $10,000 for the order. 4.29 A. BE = $780,392 B. BE units = 500 units 4.30 A. Premium then Royal then Regular C. Q = 121 lbs
PROBLEMS 4.32 A. The firm should make the tubes B. Maximum purchase price = $1.70 C. The company should purchase the tubes D. The company should make 100,000 tubes and purchase 25,000 4.33 A. 18,000 hours per year of idle capacity. B. Minimum acceptable price $5.60 C. Contribution margin per case = $1.25 per case. Advantage of accept over reject $ 6,000 D. Jazzy should accept only the Star-Mart order
Chapter 4: Relevant Costs for Nonroutine Operating Decisions 4.34 A. 1. Incremental cost: $30,000 2. Full cost: $30,550 3. Opportunity cost $3,350 B. Differential income in favour of the order 4.35 A. B. E. F.
$ 1,650
The domestic plant should not be closed. wages would need to be $0.30 per hour Domestic plant - sweatshirts, and the foreign plant - jackets. Produce the shirts domestically
4.36 B. Total incremental cost is $145,000 D. Falco should insource. 4.38 A. Produce internally B. Buy form supplier 4.39 A. Product E = 2,000 units Product D = 1,500 units Product B = 7,500 units Product C = 6,800 units Product A = 0 units B. TC = $10,000 + $25,000*Q D. Pretax loss $ (14,300) E. Pretax income $ 45,000 4.41 A. Meals CM = $1.5 Cleaning CM = $4.80 Health department CM = $2.50 B. Estimated deficit $(33,000) C. Estimated surplus $ 1,600 D. Estimated surplus $ 1,000
BUILD YOUR PROFESSIONAL COMPETENCIES 4.43 Integrating Across the Curriculum-Finance A. Option 1 Profit: = £640,000*R $ per £ - $600,000
4-3
4-4
Cost Management Option 2 Profit: = £320,000*R $ per £ - $94,000 Option 3 Profit: If R$2.1875: = £640,000*R $ per £ - $630,000 B. C. D. F.
R = 2.16875 R = 2.1125 R = 2.140625 Profit lost $ 30,000
