Product Tango is produced for $3.30 per gallon. Product Tango can be sold without additional processing for $4.23 per gallon, or processed further into Product Zulu at an additional cost of $0.47 per gallon. Product Zulu can be sold for $4.44 per gallon. a. Prepare a differential analysis dated October 3 on whether to sell Product Tango (Alternative 1) or process further into Product Zulu (Alternative 2). Round your answers to the nearest cent. If required, use a minus sign to indicate a loss. Differential Analysis Sell Product Tango (Alt. 1) or Process Further into Product Zulu (Alt. 2) October 3 SA 好 Sell Line Item Description Product Tango (Alternative 1) Process Further into Product Zulu (Alternative 2) Differential Effects (Alternative 2) Revenues, per unit $ $ Λ Profit (loss) per unit er unit $ Costs, per unit 57 L

Product Tango is produced for $3.30 per gallon. Product Tango can be sold without additional processing for $4.23 per gallon, or processed further into Product Zulu at an additional cost of $0.47 per gallon. Product Zulu can be sold for $4.44 per gallon. a. Prepare a differential analysis dated October 3 on whether to sell Product Tango (Alternative 1) or process further into Product Zulu (Alternative 2). Round your answers to the nearest cent. If required, use a minus sign to indicate a loss. Differential Analysis Sell Product Tango (Alt. 1) or Process Further into Product Zulu (Alt. 2) October 3 SA 好 Sell Line Item Description Product Tango (Alternative 1) Process Further into Product Zulu (Alternative 2) Differential Effects (Alternative 2) Revenues, per unit $ $ Λ Profit (loss) per unit er unit $ Costs, per unit 57 L

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 5BE

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Sell or process further Calgary Lumber Company incurs a cost of 315 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for 440 per hbf. An alternative is to produce a finished cut at a total processing cost of 465 per hbf, which can be sold for 600 per hbf. Prepare a differential analysis dated March 15 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).
Morrill Company produces two different types of gauges: a density gauge and a thickness gauge. The segmented income statement for a typical quarter follows. Includes depreciation. The density gauge uses a subassembly that is purchased from an external supplier for 25 per unit. Each quarter, 2,000 subassemblies are purchased. All units produced are sold, and there are no ending inventories of subassemblies. Morrill is considering making the subassembly rather than buying it. Unit-level variable manufacturing costs are as follows: No significant non-unit-level costs are incurred. Morrill is considering two alternatives to supply the productive capacity for the subassembly. 1. Lease the needed space and equipment at a cost of 27,000 per quarter for the space and 10,000 per quarter for a supervisor. There are no other fixed expenses. 2. Drop the thickness gauge. The equipment could be adapted with virtually no cost and the existing space utilized to produce the subassembly. The direct fixed expenses, including supervision, would be 38,000, 8,000 of which is depreciation on equipment. If the thickness gauge is dropped, sales of the density gauge will not be affected. Required: 1. Should Morrill Company make or buy the subassembly? If it makes the subassembly, which alternative should be chosen? Explain and provide supporting computations. 2. Suppose that dropping the thickness gauge will decrease sales of the density gauge by 10 percent. What effect does this have on the decision? 3. Assume that dropping the thickness gauge decreases sales of the density gauge by 10 percent and that 2,800 subassemblies are required per quarter. As before, assume that there are no ending inventories of subassemblies and that all units produced are sold. Assume also that the per-unit sales price and variable costs are the same as in Requirement 1. Include the leasing alternative in your consideration. Now, what is the correct decision?
Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?
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Product P is produced for $31 per gallon. Product P can be sold without additional processing for $47 per gallon or processed further into Product Q at an additional cost of $7 per gallon. Product Q can be sold for $50 per gallon. Prepare a differential analysis dated February 26 on whether to Sell Product P (Alternative 1) or Process Further into Product Q (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Product P (Alt. 1) or Process Further into Product Q (Alt. 2) February 26 SellProduct P(Alternative 1) ProcessFurtherinto Product Q(Alternative 2) DifferentialEffect(Alternative 2) Revenues, per unit $fill in the blank 11f69df4b02d053_1 $fill in the blank 11f69df4b02d053_2 $fill in the blank 11f69df4b02d053_3 Costs, per unit fill in the blank 11f69df4b02d053_4 fill in the blank 11f69df4b02d053_5 fill in the blank 11f69df4b02d053_6 Profit (loss), per unit $fill in the blank…
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Product F is produced for $3.42 per pound. Product F can be sold without additional processing for $4.07 per pound or processed further into Product G at an additional cost of $0.43 per pound. Product G can be sold for $4.42 per pound. Prepare a differential analysis dated November 15 on whether to Sell Product F (Alternative 1) or Process Further into Product G (Alternative 2). If required, round your answer to the nearest cent. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential AnalysisSell Product F (Alt. 1) or Process Further into Product G (Alt. 2)November 15 SellProduct F(Alternative 1) ProcessFurther intoProduct G(Alternative 2) DifferentialEffect(Alternative 2) Revenues, per unit $fill in the blank 15afe8f7b050fa7_1 $fill in the blank 15afe8f7b050fa7_2 $fill in the blank 15afe8f7b050fa7_3 Costs, per unit fill in the blank 15afe8f7b050fa7_4 fill in the blank 15afe8f7b050fa7_5 fill in the blank 15afe8f7b050fa7_6…
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Alnusairat company is processing Milk with a joint cost of $100000 to produce 2000 units of product A and 1000 units of product B, selling price at split off point for A is $30 and for B is $50, if further processing is tool place the selling price of super A is $45 and for super B is $60, additional cost of super A is $20000 and for super B is $30000, your recommendation is further process of A and sell B at split off? a. False. b. True. 2 Alnusairat company is processing Milk with a joint cost of $100000 to produce 2000 units of product A and 1000 units of product B, selling price at split off point for A is $30 and for B is $50, if further processing is tool place the selling price of super A is $45 and for super B is $60, additional cost of super A is $35000 and for super B is $30000, your recommendation is further process of A and sell B at split off? a. True. b. False. 3 Alnusairat company is processing Milk with a joint cost of $100000 to produce 2000 units of…
Product T is produced for $5.90 per pound. Product T can be sold without additionalprocessing for $7.10 per pound, or processed further into Product U at an additionalcost of $0.74 per pound. Product U can be sold for $8.00 per pound. Prepare and show in solution a differential analysis dated August 2 on whether to sell Product T (Alternative 1) or process further into Product U (Alternative 2).
Bunyon Lumber Company incurs a cost of $400 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $566 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $521 per hbf, which can be sold for $760 per hbf. Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) August 9 SellRough-Cut(Alternative 1) ProcessFurther intoFinished Cut(Alternative 2) DifferentialEffecton Income(Alternative 2) Revenues, per 100 board ft. $fill in the blank 011e61ff8033fc9_1 $fill in the blank 011e61ff8033fc9_2 $fill in the blank 011e61ff8033fc9_3 Costs, per 100 board ft. fill in the blank 011e61ff8033fc9_4 fill in the blank…