EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475950
Author: Datar
Publisher: PEARSON CO
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The fixed costs of Anton, Inc. are $354,000 and the total variable costs for its only product are 45% of the sales price, which is $140. Anton currently sells 5,700 units per month and is looking to sell more. Consider each of the following independently:
Part A
The marketing manager thinks sales are too low in Georgia and suggests that sales there would be increased by 240 units per month if an additional $8,000 per month was spent advertising there. What should be the effect on monthly income if this additional advertising is done? (Increase by 10480, 7120, 447905, or 5645?)
Part B
Management is considering adding a new feature to its product that will cause an increase in variable costs of $9 per unit. It is expected that sales will increase by 710 units per month if this feature is added. If the feature is added, what should be the overall effect on the company's monthly income? (Decrease by 3020, 12,960, 3519, or increase by 48280?)
Part C
The marketing manager is considering…
SOWSEY Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows:
Annual Sales
2,500 units
Selling Price per unit
P304
Variable Costs per unit:
Production
P125
Selling
P49
Avoidable fixed costs per year:
Production
P50,000
Selling
P75,000
Allocated common corporate costs per year
P55,000
If the new product is added, the combined contribution margin of the other existing products lines is expected to drop P65,000 per year. Total common corporate costs would be unaffected by the decision of whether to add the new product. What is the lowest selling price per unit that could be charged for the new product line and still make an additional P2 income per unit?
Pharoah Industries produces and sells electronic sound equipment. The company has production capacity of 20600 units and currently production schedule is for 18600 units. Each unit has a selling price of $25, variable product cost of $15, and variable selling cost of $2. Another division wishes to purchase 560 units. If Pharoah sells the units to the other division, it will avoid $1 of the variable selling costs. What is the minimum transfer price that will maximize corporate profits?
$25
$15
$17
$16
Chapter 21 Solutions
EBK HORNGREN'S COST ACCOUNTING
Ch. 21 - Capital budgeting has the same focus as accrual...Ch. 21 - List and briefly describe each of the five stages...Ch. 21 - Prob. 21.3QCh. 21 - Only quantitative outcomes are relevant in capital...Ch. 21 - How can sensitivity analysis be incorporated in...Ch. 21 - Prob. 21.6QCh. 21 - Describe the accrual accounting rate-of-return...Ch. 21 - Prob. 21.8QCh. 21 - Lets be more practical. DCF is not the gospel....Ch. 21 - All overhead costs are relevant in NPV analysis....
Ch. 21 - Prob. 21.11QCh. 21 - Distinguish different categories of cash flows to...Ch. 21 - Prob. 21.13QCh. 21 - How can capital budgeting tools assist in...Ch. 21 - Distinguish the nominal rate of return from the...Ch. 21 - A company should accept for investment all...Ch. 21 - Prob. 21.17MCQCh. 21 - Which of the following statements is true if the...Ch. 21 - Prob. 21.19MCQCh. 21 - Nicks Enterprises has purchased a new machine tool...Ch. 21 - Prob. 21.21ECh. 21 - Capital budgeting methods, no income taxes. Yummy...Ch. 21 - Capital budgeting methods, no income taxes. City...Ch. 21 - Prob. 21.24ECh. 21 - Capital budgeting with uneven cash flows, no...Ch. 21 - Comparison of projects, no income taxes. (CMA,...Ch. 21 - Payback and NPV methods, no income taxes. (CMA,...Ch. 21 - DCF, accrual accounting rate of return, working...Ch. 21 - Prob. 21.29ECh. 21 - Prob. 21.30ECh. 21 - Project choice, taxes. Klein Dermatology is...Ch. 21 - Prob. 21.32ECh. 21 - Selling a plant, income taxes. (CMA, adapted) The...Ch. 21 - Prob. 21.36PCh. 21 - NPV and AARR, goal-congruence issues. Liam...Ch. 21 - Payback methods, even and uneven cash flows. Sage...Ch. 21 - Replacement of a machine, income taxes,...Ch. 21 - Recognizing cash flows for capital investment...Ch. 21 - NPV, inflation and taxes. Fancy Foods is...Ch. 21 - NPV of information system, income taxes. Saina...
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