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1.
Operate Invest
Retail Store in Bonds on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs:
Costs to operate retail store
Cost of equipment less residual value
Income (loss)
2.
The proposal to operate the retail store should be
3.
Total estimated revenue from operating store
Total estimated expenses to operate store:
Cost to operate store, excluding depreciation
Cost of store equipment less residual value
Total estimated income from operating store
Problem 24(9)-1A
Name:
Section:
Estimated Income from Operations
Score:
Key Code:
Differential Analysis
Operate Retail Store or Invest in Bonds
October 1
Differential Effect
0%
[Key code here]
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1.
Operate Invest
Retail Store in Bonds on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues 1,264,000$ 172,800$ (1,091,200)$
Costs:
2.
The proposal to operate the retail store should be rejected
3.
Total estimated revenue from operating store 1,264,000$
Total estimated expenses to operate store:
Estimated Income from Operations
Differential Effect
Problem 24(9)-1A
Name:
Solution
Section:
ON
Score:
October 1
Differential Analysis
Operate Retail Store or Invest in Bonds
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1.
Operate Invest
Warehouse in Bonds on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs:
Costs to operate warehouse
Cost of equipment less residual value
Income (loss)
2.
The proposal to operate the warehouse should be
3.
Total estimated revenue from operating warehouse
Total estimated expenses to operate warehouse:
Cost to operate warehouse, excluding depreciation
Cost of equipment less residual value
Total estimated income from operating warehouse
0%
[Key code here]
Problem 24(9)-1B
Name:
Section:
Estimated Income from Operations
Score:
Key Code:
Differential Analysis
Operate Warehouse or Invest in Bonds
July 1
Differential Effect
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1.
Operate Invest
Warehouse in Bonds on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues 3,640,000$ 518,000$ (3,122,000)$
Costs:
2.
The proposal to operate the warehouse should be accepted
3.
Total estimated revenue from operating warehouse 3,640,000$
Total estimated expenses to operate warehouse:
Score:
ON
Name:
Solution
Section:
July 1
Differential Analysis
Operate Warehouse or Invest in Bonds
Estimated Income from Operations
Differential Effect
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1.
Continue with Replace
Old Machine Old Machine on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues:
Proceeds from sale of old machine
Costs:
Purchase price
Annual manufacturing costs (6 yrs.)
Income (loss)
The proposal to replace the machine should be
2.
[Key code here]
April 30
Differential Effect
[Key essay answer here]
Differential Analysis
Continue with Old Machine or Replace with New Machine
0%
Score:
Key Code:
Problem 24(9)-2A
Name:
Section:
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1.
Continue with Replace
Old Machine Old Machine on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues:
Proceeds from sale of old machine –$ 29,700$ 29,700$
Costs:
2.
Other factors to be considered include:
a. Are there any improvements in the quality of work turned out by the new machine?
b. What effect does the federal income tax have on the decision?
c. What opportunities are available for the use of the $90,000 of funds ($119,700 less $29,700 proceeds
from the old machine) that are required to purchase the new machine??
April 30
Differential Analysis
Continue with Old Machine or Replace with New Machine
Differential Effect
Problem 24(9)-2A
Name:
Solution
Section:
Score:
ON
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1.
Continue with Replace
Old Machine Old Machine on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues:
Proceeds from sale of old machine
Costs:
Purchase price
Annual manufacturing costs (6 yrs.)
Income (loss)
The proposal to replace the machine should be
2.
[Key code here]
November 8
Differential Effect
[Key essay answer here]
Differential Analysis
Continue with Old Machine or Replace Old Machine
0%
Score:
Key Code:
Name:
Section:
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1.
Continue with Replace
Old Machine Old Machine on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues:
Proceeds from sale of old machine –$ 12,900$ 12,900$
2.
Other factors to be considered include:
a. Are there any improvements in the quality of work turned out by the new machine?
b. What effect does the federal income tax have on the decision?
c. What opportunities are available for the use of the $44,100 of funds ($57,000 less $12,900 proceeds
from the old machine) that are required to purchase the new machine?
November 8
Differential Analysis
Continue with Old Machine or Replace Old Machine
Differential Effect
Problem 24(9)-2B
Name:
Solution
Section:
Score:
ON
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1.
Promote Promote
Moisturizer Perfume on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs:
Direct materials
Direct labor
Variable factory overhead
Variable operating expenses
Sales promotion
Income (loss)
Parisian should promote the
2.
August 21
Differential Effect
0%
[Key code here]
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Differential Analysis
Promote Moisturizer or Promote Perfume
Score:
Key Code:
Instructions
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[Key essay answer here]
Name:
Section:
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1.
Promote Promote
Moisturizer Perfume on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues 1,210,000$ 1,200,000$ (10,000)$
Costs:
Direct materials
(198,000) (280,000) (82,000)
2.
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Score:
Instructions
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ON
The sales manager’s tentative decision should be opposed. The sales manager erroneously
considered the full unit costs instead of the differential (additional) revenue and differential
August 21
Differential Analysis
Promote Moisturizer or Promote Perfume
Differential Effect
Problem 24(9)-3A
Name:
Solution
Section:
Variable factory overhead
Sales promotion
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1.
Promote Promote
Tennis Shoe Walking Shoe on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs:
Direct materials
Direct labor
Variable factory overhead
Variable operating expenses
Sales promotion
Income (loss)
Sole Mates should promote
2.
Score:
Key Code:
[Key code here]
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Differential Analysis
Promote Tennis Shoe or Promote Walking Shoe
June 19
Differential Effect
Instructions
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[Key essay answer here]
Name:
Section:
0%
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1.
Promote Promote
Tennis Shoe Walking Shoe on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues 595,000$ 700,000$ 105,000$
Costs:
Direct materials
(133,000) (224,000) (91,000)
Direct labor (56,000) (84,000) (28,000)
2.
Score:
Instructions
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ON
Problem 24(9)-3B
Name:
Solution
Section:
The sales manager’s tentative decision should be opposed. The sales manager erroneously considered
June 19
Differential Analysis
Promote Tennis Shoe or Promote Walking Shoe
Differential Effect
Cells with non-gray backgrounds are protected and cannot be edited.
Variable factory overhead
Sales promotion
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1. High Good Regular
Grade Grade Grade
Selling price
Variable conversion cost per unit
Direct materials cost per unit
Total cost per unit
Contribution margin
2. High Good Regular
Grade Grade Grade
Contribution margin per unit
Divided by furnace (bottleneck) hours per unit
Contribution margin per furnace hour
[Key essay answer here]
0%
[Key code here]
Score:
Key Code:
Name:
Section:
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1. High Good Regular
Grade Grade Grade
Selling price 280$ 270$ 250$
Variable conversion cost per unit 180$ 165$ 150$
2. High Good Regular
Grade Grade Grade
Contribution margin per unit 10.00$ 21.00$ 20.00$
Score:
Problem 24(9)-6A
Name:
Solution
Section:
The Good Grade steel has the largest contribution margin per unit ($21); however, the Regular grade has
the largest contribution margin per furnace hour ($8). Thus, using production bottleneck analysis
ON