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1.
Ethylene Butane Ester
Selling price
Variable conversion cost per unit
Direct materials cost per unit
Total cost per unit
Contribution margin per unit
2.
Ethylene Butane Ester
Contribution margin per unit
Divided by reactor (bottleneck) hours per unit
Contribution margin per reactor hour
Score:
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1.
Ethylene Butane Ester
Selling price 170$ 155$ 130$
Variable conversion cost per unit 40$ 40$ 30$
2.
Ethylene Butane Ester
Contribution margin per unit 15$ 27$ 15$
Divided by reactor (bottleneck) hours per unit 1.50 1.00 0.50
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Problem 24(9)-6B
Name:
Solution
Section:
ON
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a.
Continue Discontinue
Cups Cups on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs:
Variable cost of goods sold
Variable selling and admin. expenses
Fixed costs
Income (loss)
b.
The Cups line should be since income
would by if the cups were discontinued.
Score:
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Instructions
Exercise 24(9)-4
Name:
Section:
0%
Continue or Discontinue Cups
March 31, 2016
Differential Effect
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Differential Analysis
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a.
Continue Discontinue
Cups Cups on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues 31,300$ -$ (31,300)$
Costs:
b.
The Cups line should be retained since income
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Instructions
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Differential Effect
Exercise 24(9)-4
Name:
Solution
Section:
March 31, 2016
Differential Analysis
Continue or Discontinue Cups
ON
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a.
Make Carrying Buy Carrying
Case Case on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Costs:
Purchase price
Direct materials per unit
Direct labor per unit
Variable factory overhead per unit
Fixed factory overhead per unit
Income (loss)
b.
Assuming there are no better uses for the spare capacity,
the carrying cases should be since costs per unit
would by by doing so.
The fixed factory overhead is to the decision.
Make or Buy Carrying Case
July 19
Differential Effect
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Differential Analysis
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Exercise 24(9)-7
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a.
Make Carrying Buy Carrying
Case Case on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Costs:
Purchase price
-$ (70.00)$ (70.00)$
b.
Assuming there are no better uses for the spare capacity,
the carrying cases should be manufactured since costs per unit
Exercise 24(9)-7
Name:
Solution
Section:
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ON
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Score:
Instructions
Differential Effect
July 19
Differential Analysis
Make or Buy Carrying Case
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a.
Layout Pages Purchase
Internally Layout Services on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Costs:
Purchase price of layout work
Salaries
Benefits
Supplies
Office expenses
Office depreciation
Computer depreciation
Income (loss)
b.
c.
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Differential Analysis
[Key essay answer here]
Layout Pages Internally or Purchase Layout Services
February 22
Differential Effect
[Key essay answer here]
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Exercise 24(9)-8
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Section:
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a.
Layout Pages Purchase
Internally Layout Services on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Costs:
Purchase price of layout work - (312,000) (312,000)
Salaries (224,000) - 224,000
Benefits (36,000) - 36,000
b.
c.
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Exercise 24(9)-8
Name:
Solution
Section:
ON
The benefit from using an outside service is shown to be $8,000 greater than performing the layout work
Before electing to terminate the five employees, the guild should consider the long-run impact of the
decision. Specifically, future page layout rates may grow faster than the cost of internal salaries, thus
Differential Effect
February 22
Differential Analysis
Layout Pages Internally or Purchase Layout Services
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a.
Continue with Replace
Old Machine Old Machine on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues:
Sales (5 years)
Costs:
Purchase price
Direct materials (5 years)
Direct labor (5 years)
Power and maintenance (5 years)
Taxes, insurance, etc. (5 years)
Selling and admin. expenses (5 years)
Income (loss)
b.
The proposal be accepted.
c.
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Exercise 24(9)-10
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Section:
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Differential Analysis
[Key essay answer here]
Keep or Replace Machine
May 4
Differential Effect
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a.
Continue with Replace
Old Machine Old Machine on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues:
Sales (5 years) 1,025,000$ 1,025,000$ -$
Costs:
Purchase price - (180,000) (180,000)
b.
The proposal should not be accepted.
c.
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In addition to the factors given, consideration should be given to such factors as: Do both present
and proposed operations provide the same capacity? What opportunity costs are associated with
Differential Effect
May 4
Differential Analysis
Keep or Replace Machine
Exercise 24(9)-10
Name:
Solution
Section:
Score:
ON
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Enter a zero in cells you would otherwise leave blank.
a.
Sell Regular
Columbian Into Decaf on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs
Income (loss)
b.
The differential revenue from processing further to Decaf Columbian is
the differential cost of processing further. Thus, Rise N' Shine Coffee
process further into Decaf Columbian.
c.
The decrease in selling price of Decaf Columbian that would cause neither an advantage or
disadvantge for processing further:
The current selling price less the decrease would be:
Verify by completing the following differential analysis based on the new selling price:
Sell Regular
Columbian Into Decaf on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs
Income (loss)
Exercise 24(9)-12
Name:
Section:
Volume of Decaf Columbian
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Differential Analysis
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0%
Process Futher
Differential Effect
Sell Regular Columbian or Process Further into Decaf Columbian
October 6
Differential Effect
Process Futher
Net Advantage of Further Processing
=
=
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a.
Sell Regular
Columbian Into Decaf on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues 55,320$ 67,716$ 12,396$
b.
The differential revenue from processing further to Decaf Columbian is more than
c.
Increase in selling price of Decaf Columbian that would cause neither an advantage or
disadvantge for processing further:
$2,166
Verify by completing the following differential analysis based on the new selling price:
Sell Regular
Columbian Into Decaf on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues 55,320$ 65,550$ 10,230$
Process Futher
Sell Regular Columbian or Process Further into Decaf Columbian
ON
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Score:
Exercise 24(9)-12
Name:
Solution
Section:
October 6
Differential Analysis
Instructions
Net Advantage of Further Processing
Process Futher
Differential Effect
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Differential Effect
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a.
Reject Order Accept Order on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
Costs:
Direct materials
Direct labor
Variable factory overhead
Variable selling and admin. expenses
Shipping costs
Certification costs
Income (loss)
Goodman accept the special order from Euro Motors.
b.
Alternative calculation:
=
Selling Price Offered
by Euro Motors
-
Number of Units
-
=
Number of Units
Differential Income from
Accepting Special Order
Minimum Price per Unit
=
Total Differential Costs
=
Score:
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Exercise 24(9)-15
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Differential Effect
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Differential Analysis
Reject or Accept Order
January 21
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a.
Reject Order Accept Order on Income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues -$ 2,320,000$ 2,320,000$
Costs:
Direct materials - (1,120,000) (1,120,000)
Direct labor - (440,000) (440,000)
b.
2,234,000
20,000
Minimum Price per Unit
=
ON
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=
Exercise 24(9)-15
Name:
Solution
Section:
Differential Analysis
=
$111.70
Reject or Accept Order
Differential Effect
Total Differential Costs
Number of Units
January 21
