MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
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Chapter 10, Problem 2PSA
Calla Company produces skateboards that sell for $50 per unit. The company currently has the capacity to produce 90,000 skateboards per year, but is selling 80,000 skateboards per year. Annual costs for 80,000 skateboards follow.
A new retail store has offered to buy 10,000 of its skateboards for $45 per unit. The store is in a different market from Calla’s regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following:
- Direct materials and direct labor arc 100% variable.
- Thirty percent of overhead is fixed at any production level from 80,000 units to 90,000 units the remaining 70% of annual overhead costs are variable with respect to volume.
- Selling expenses are 60% variable with respect to number of units sold, and the other 40% of selling expenses are fixed.
- There will be an additional $2 per unit selling expense for this order.
- Administrative expenses would increase by a $1,000 fixed amount.
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Steele Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racingbikes with limited sales. Steele produces and sells only 10,000 bikes each year. Due to the low volume of activity, Steele is unable to obtainthe economies of scale that larger producers achieve. For example, Steele could buy the handlebars for $31 each; they cost $34 each tomake. The following is a detailed breakdown of current production costs.
Item
Unit Cost
Total
Unit Level Costs
Materials
$16
160,000
Labor
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120,000
Overhead
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20,000
Allocated Facility Level Cost
4
40,000
Total
$34
340,000
After seeing these figures, Steele’s president remarked that it would be foolish for the company to continue to produce the handlebars at $34each when it can buy them for $31 each.RequiredCalculate the total relevant cost. Do you agree with the president’s conclusion?
Per Unit
Total
Total Relevant Cost
A manufacturing firm is making auto parts. The machine operators do the packaging and fill the shipping boxes. Each box should contain 60 parts, but the operators
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MARR of 10%.
1. What is the after-tax present worth?
2. What is the after-tax payback period? (No-return payback period)
Chapter 10 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
Ch. 10 - Prob. 1MCQCh. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 1DQCh. 10 - Is nonfinancial information ever useful in...Ch. 10 - What is a relevant cost? Identify the two types of...Ch. 10 - Prob. 4DQCh. 10 - Prob. 5DQ
Ch. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQCh. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Signal mistakenly produced 1,000 defective cell...Ch. 10 - Prob. 10QSCh. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Rory Company has a machine with a book value of...Ch. 10 - Fill in each of the blanks below with the correct...Ch. 10 - Prob. 2ECh. 10 - Goshford Company produces a single product and has...Ch. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Suresh Co. expects its five departments to yield...Ch. 10 - Exercise 23-11 Sales mix A1 Childress Company...Ch. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 1PSACh. 10 - Calla Company produces skateboards that sell for...Ch. 10 - Prob. 3PSACh. 10 - Prob. 4PSACh. 10 - Prob. 5PSACh. 10 - Elegant Decor Companys management is trying to...Ch. 10 - Prob. 1PSBCh. 10 - Prob. 2PSBCh. 10 - Prob. 3PSBCh. 10 - Prob. 4PSBCh. 10 - Prob. 5PSBCh. 10 - Esme Companys management is trying to decide...Ch. 10 - Prob. 10SPCh. 10 - Apple currently chooses to buy (mainly from...Ch. 10 - Prob. 3BTNCh. 10 - Assume that you work for Greebles Department...Ch. 10 - Prob. 5BTNCh. 10 - Prob. 6BTNCh. 10 - Prob. 7BTNCh. 10 - Prob. 8BTNCh. 10 - Prob. 9BTN
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