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:
Per device cost basis
Administrative (fixed)
Marketing (variable)
Indirect costs (fixed)
66,000
60,000
Total Cost per
Cost Device
4,500,000$ 75$
20%
522$
Given P01-37:
IMPERIAL DEVICES
Supplies and other costs that will vary with production
Indirect costs that will not vary with production
Variable marketing costs
Administrative costs (will not vary with production)
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
Selling price percentage above cost
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)
Fixed costs (do not vary with output)
Other costs varying with output
Direct labor
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
Total Costs
Other costs
Rent
Utilities
50,000$
152,000$
Total costs
Utilities
Rent
Other costs
60,000
CAMPUS PACKAGE DELIVERY
Given P01-40:
Annual Income Statement before Expansion
Vehicle leases
Sales revenue
Costs
Total annual cost to lease necessary vehicles
Percentage increase in rent and other costs
Percentage increase in labor and utilities
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 -$91,426 in
differential costs), it would seem that the contract should be rejected. Of
Problem 01-42
Equipment lease
before making this decision?
Requirement c: What considerations, other than costs, are necessary
Requirement a:
Instructor
Officers‘ salaries
Supplies
Rent
90,000$
85,000$
504,000$
Officers‘ salaries
Other costs
Total costs
Equipment lease
Rent
Supplies
239,400
Given P01-42:
B-YOU
Annual Income Statement
Labor
Sales revenue
Costs
Percentage increase in equipment lease
Percentage increase in other costs
Percentage increase in supplies