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Accounting 211
Monday, April 26th, 1999
Announcements: none
Lecture notes:
Chapter 23 Homework
Questions
It is comprised of future cost, revenue, and resource usage data that are different for each alternative. The information should be relevant and omit past data or data common to each alternative under study.
Variable costing uses the variable manufacturing costs for product costing and inventory valuation, while absorption costing assigns all manufacturing costs to products.
- Variable costing measures the contribution margin of each product or period.
- They determine which costs would be present whether or not the product is produced.
- Because the fixed overhead cost would be there even if the product wasn't produced. Fixed cost would be relevant if additional ones are incurred to facilitate the transaction.
- Avoidable costs are costs that will be eliminated if operation is discontinued. Traceable costs are associated with a particular unit of operation.
- They are incurred regardless of the point at which the products are sold.
Short Exercises
expected sales increase, cost of materials needed, machine operator labor
7.
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Cost to make = $9.50 per unit = $71,250 |
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Cost to buy = $72,500 |
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Make the part |
8. Variable cost = $20.60, do not accept order
Exercises
3.
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1) |
Revenue = (9000 x 7) - (9000 x .10) - 400 = $61,700 |
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Relevant cost = $10 per knob = $90,000 |
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2) |
b--reprocess |
5.
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Sales |
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296,400 |
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VCOGS |
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VCOGAS |
107,690 |
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- End Inv |
11,690 |
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VCOGS |
96,000 |
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+ Variable selling costs |
69,820 |
165,820 |
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CM |
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130,580 |
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- Fixed costs |
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Fixed manuf. Costs |
16,540 |
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Fixed selling expense |
36,980 |
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Fixed admin. Expense |
27,410 |
80,930 |
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Income before taxes |
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49,650 |
9.
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1) |
Product A = 2,400,000 |
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Product B = 2,600,000 |
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Produce B |
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2) |
Sales |
4,400,000 |
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- VCOGS |
- 1,800,000 |
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CM |
2,600,000 |
10. Shut down Nio Division, increase in total income would be $8,000
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