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Student Name:
Class:
A B C D
75.00$ 75.00$ 75.00$ 75.00$ 75.00$
150.00 150.00 150.00 150.00 150.00
45.00 45.00 45.00 45.00 45.00
A. Only the differential production costs could be considered as the cost basis.
B. The total cost per device for normal production of 60,000 devices could be used as the
cost basis.
C. The total cost per device for production of 66,000 devices, excluding marketing costs,
could be used as the cost basis.
Supplies (variable)
IMPERIAL DEVICES
McGraw-Hill/Irwin
Instructor
Costs
(One Unit = One Device)
Unit Cost Options
D. The total cost per device for production of 66,000 devices, including marketing costs,
could be used as the cost basis.
Problem 01-37
Labor (variable)
Materials (variable)
Leave cells blank if costs are not to be included. Where necessary, round to the nearest cent.
Enter data to compute the following options:
66,000
60,000
Total Cost per
Cost Device
4,500,000$ 75$
20%
522$
Given P01-37:
Materials
IMPERIAL DEVICES
Manufacturing plant capacity (in units)
Actual annual production (in units)
Cost to Produce 60,000 monitors
Production costs:
State Government Contract:
Selling price percentage above cost
Per unit selling price expected on contract
Student Name:
Class:
A B C
Costs
Unit Cost Options
Production Costs
Instructor
McGraw-Hill/Irwin
Problem 01-39
T-COMM
Enter data in the shaded cells to compute the following options:
A. Use the full per unit cost for normal production of 2,400 units.
B. Use only differential costs as the cost basis.
C. Use differential costs plus a share of fixed costs, based on actual production
volume (with North's order) of 3,000 units.
Leave cells blank if costs are not to be included.
3,000
2,400
Total Cost per
Cost Unit
Total costs 2,880,000$ 1,200$
600
Size of North's order (in units)
Given P01-39:
North Division's Order:
Cost to Produce 2400 units:
T-COMM
Annual production planned before North Division's order (units)
South Division's annual production capacity (units)
Student Name:
Class:
Status Quo: Alternative:
No Express With Express
Service Service Difference
(1) (2) (3)
152,000$ 202,000$ 50,000$
60,000 67,500 7,500
Costs:
Sales revenue
Vehicle leases
Instructor
Problem 01-40
McGraw-Hill/Irwin
CAMPUS PACKAGE DELIVERY
Income Statement
50,000$
152,000$
60,000
CAMPUS PACKAGE DELIVERY
Expected annual revenue from new express service
Given P01-40:
Annual Income Statement before Expansion
Vehicle leases
Sales revenue
Costs
Student Name:
Class:
Without
The Differential
Contract Costs
504,000$ 90,000$
239,400 85,000
35,280 1,764
Labor
Requirement b: If the contract pays $90,000 should it be accepted?
Other factors would include (1) whether this will enable the company to get into
McGraw-Hill/Irwin
Costs
Sales revenue
B-YOU
Since acceptance of the contract would result in an decrease of operating
profits by $1,426 (=$90,000 paid according to the contract -$91,426 in
differential costs), it would seem that the contract should be rejected. Of
Problem 01-42
Equipment lease
before making this decision?
Requirement c: What considerations, other than costs, are necessary
Requirement a:
Instructor
90,000$
85,000$
504,000$
239,400
Given P01-42:
B-YOU
Cost of full-time consultant
Revenue from new contract
Annual Income Statement
Labor
Sales revenue
Costs
