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Chapter 30 - Cost-Revenue Analysis for Decision Making
79. The following information relates to a one-time special order from a flood relief
organization for 200 of its book bags at $8.50. Current manufacturing costs are as follows.
30-35
80. The following information relates to the purchase of new machine being considered.
The new machine would enable the company to make 13,500 units per year. The current
capacity of 12,000 is based on the maximum number of units that the old machine can
produce. The company has had to turn down orders in the past few years due to this limit on
capacity and estimates that it can sell as many of the product as it can produce. The sales price
per unit of the product is $34.50. Determine the relevant data. Pose one addition consideration
regarding this decision.
Chapter 30 - Cost-Revenue Analysis for Decision Making
Matching Questions
90. Match the following descriptions with the appropriate term.
1. Sales minus the variable cost of goods sold
Controllable
fixed costs
6
2. The difference in cost between one alternative and
another
Manufacturing
margin
1
3. The manufacturing margin minus variable operating
expenses
Sunk cost
4
4. A cost that has been incurred and will not change as a
result of a decision
Absorption
costing
9
5. Costs not directly traceable to a specific segment of a
business
Opportunity cost
10
6. Costs that the segment manager can control
Differential cost
2
7. The accounting procedure whereby only variable costs
are included in the cost of goods manufactured, and fixed
manufacturing costs are written off as expenses in the
period in which they are incurred
Marginal
income
3
8. Revenues minus variable costs
Common costs
5
9. The accounting procedure whereby all manufacturing
costs, including fixed costs, are included in the cost of
goods manufactured
Direct costing
7
10. Potential earnings or benefits that are given up
because a certain course of action is taken
Contribution
margin
8
