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375
E12–12
a. MADISON INDUSTRIES INC.
Sell to Story Mills Company
Differential Analysis Report
Differential revenue from accepting the offer:
Revenue from sale of 125,000 additional units at $41 ................ $5,125,000
E12–13
a. Budgeted cost per battery for June = Total manufacturing costs ÷ Budgeted
production
376
E12–14
a. MIRAMAR TIRE AND RUBBER COMPANY
Sell to Rio Motors
Differential Analysis Report
Per Unit Total
Differential revenue from accepting special offer ... $20.00 $ 800,000*
Differential costs from accepting special offer:
b. Differential cost per tire for special order:
377
E12–15
E12–16
a. Total manufacturing costs:
b.
Percentage
Markup = Costs ingManufactur Total
Expenses ative Administrand Selling Total +Profit Desired
378
E12–17
a. Total variable costs: $240 × 200,000 units ........................................ $48,000,000
E12–18
a. The price will be set at the estimated average market price required to remain
b. The required profit margin of 20% of the estimated $25,000 price implies a
$20,000 target product cost as follows:
379
E12–19
a. Historical markup percentage on product cost: $160
$160 -- $200 = 25% or
c.
380
PROBLEMS
P12–1
1. FIVE STAR
Proposal to Operate Warehouse
381
P12–2
1. CATALINA TOOLING COMPANY
Proposal to Replace Machine
Annual manufacturing costs associated with old machine ............... $ 33,150
2. Other factors to be considered include the following:
382
P12–3
1. ROCKET SHOE COMPANY
Proposals for Sales Promotion Campaign
Cross-Trainer Running
Shoe
Shoe
Differential revenue from proposals ................. $ 2,250,0001 $ 2,016,0006
Differential cost of proposals:
2. The sales manager’s tentative decision should be opposed. The sales manag-
383
P12–4
1. DORSCH ALUMINUM CO.
Proposal to Process Aluminum Ingot Further
Differential revenue from further processing per batch:
Revenue from sale of rolled aluminum
384
P12–5
1. $240,000 ($1,200,000 × 20%)
2. a. Total costs:
Variable ($50.00 × 20,000 units) .................................................... $1,000,000
3. a. Total manufacturing costs:
Variable manufacturing costs ($46 × 20,000 units) ..................... $ 920,000
