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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
Estimated Income from Operations
Score:
Key Code:
Instructions
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Differential Analysis
Operate Retail Store or Invest in Bonds
October 1
Differential Effect
0%
[Key code here]
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Problem 25-1A
Name:
Section:
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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:
3.
Total estimated revenue from operating store 1,264,000$
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Score:
October 1
Differential Analysis
Operate Retail Store or Invest in Bonds
Estimated Income from Operations
Differential Effect
Instructions
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Problem 25-1A
Name:
Solution
Section:
ON
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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
Estimated Income from Operations
Score:
Key Code:
Instructions
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Differential Analysis
Operate Warehouse or Invest in Bonds
July 1
Differential Effect
0%
[Key code here]
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Problem 25-1B
Name:
Section:
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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:
Estimated Income from Operations
Differential Effect
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Score:
Instructions
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ON
July 1
Differential Analysis
Operate Warehouse or Invest in Bonds
Problem 25-1B
Name:
Solution
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
Costs:
Purchase price
Annual manufacturing costs (6 yrs.)
Income (loss)
The proposal to replace the machine should be
2.
Differential Analysis
Continue with Old Machine or Replace with New Machine
0%
Score:
Key Code:
Instructions
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[Key code here]
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April 30
Differential Effect
[Key essay answer here]
Problem 25-2A
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.
Problem 25-2A
Name:
Solution
Section:
ON
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Score:
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?
April 30
Differential Analysis
Continue with Old Machine or Replace with New Machine
Differential Effect
Instructions
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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.
Differential Analysis
Continue with Old Machine or Replace Old Machine
0%
Score:
Key Code:
Instructions
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[Key code here]
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November 8
Differential Effect
[Key essay answer here]
Problem 25-2B
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$
Costs:
2.
Problem 25-2B
Name:
Solution
Section:
ON
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Score:
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?
November 8
Differential Analysis
Continue with Old Machine or Replace Old Machine
Differential Effect
Instructions
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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.
Score:
Key Code:
[Key code here]
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Differential Analysis
Promote Moisturizer or Promote Perfume
August 21
Differential Effect
Instructions
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[Key essay answer here]
Problem 25-3A
Name:
Section:
0%
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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.
Score:
Instructions
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ON
Problem 25-3A
Name:
Solution
Section:
The sales manager’s tentative decision should be opposed. The sales manager erroneously
August 21
Differential Analysis
Promote Moisturizer or Promote Perfume
Differential Effect
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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.
Differential Analysis
Promote Tennis Shoe or Promote Walking Shoe
June 19
Differential Effect
Score:
Key Code:
Instructions
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[Key essay answer here]
Problem 25-3B
Name:
Section:
0%
[Key code here]
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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:
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 (additional) costs. An
June 19
Differential Analysis
Promote Tennis Shoe or Promote Walking Shoe
Differential Effect
Problem 25-3B
Name:
Solution
Section:
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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
Problem 25-6A
Name:
Section:
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[Key essay answer here]
0%
[Key code here]
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Score:
Key Code:
Instructions
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1. High Good Regular
Grade Grade Grade
Selling price 280$ 270$ 250$
2. High Good Regular
Grade Grade Grade
Contribution margin per unit 10.00$ 21.00$ 20.00$
Problem 25-6A
Name:
Solution
Section:
ON
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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:
Key Code:
Instructions
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[Key essay answer here]
Problem 25-6B
Name:
Section:
0%
[Key code here]
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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$
Problem 25-6B
Name:
Solution
Section:
ON
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1. Production Setup Inspection Shipping Cust. Serv.
Total activity cost
Divided by total activity base mh setups inspections cust. orders requests
Activity rate
2.
Activity Activity Activity Activity Activity Activity
Activity
Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost
Production mh mh mh
Setup setups setups setups
Inspection insp. insp. insp.
Shipping cust. orders cust. orders cust. orders
Customer service requests requests requests
Total
Number of units
Activity cost per unit
3.
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Powdered Sugar
[Key essay answer here]
Score:
Key Code:
Instructions
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White Sugar
Brown Sugar
0%
[Key code here]
Problem 25-7A
Name:
Section:
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1. Production Setup Inspection Shipping Cust. Serv.
2.
Activity Activity Activity Activity Activity Activity
Activity
Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost
Production 2,000 mh $55 110,000$ 1,250 mh $55 68,750$ 1,250 mh $55 68,750$
3.
The unit costs are different even though each product requires 0.25 machine hour
because the products consume many activities in ratios different from the volume. For
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White Sugar
Brown Sugar
ON
Problem 25-7A
Name:
Solution
Section:
Powdered Sugar
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1. Production Setup Moving Shipping
Prod. Engineering
Total activity cost
Divided by total activity base mh setups moves cust. orders test runs
Activity rate
2.
Activity Activity Activity Activity Activity Activity
Activity
Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost
Production mh mh mh
Setup setups setups setups
Moving moves moves moves
Shipping cust. orders cust. orders cust. orders
Product engineering test runs test runs test runs
Total
Number of units
Activity cost per unit
3.
0%
[Key code here]
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Problem 25-7B
Name:
Section:
Specialty Paper
[Key essay answer here]
Score:
Key Code:
Instructions
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Computer Paper
Newsprint
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1. Production Setup Moving Shipping Prod. Engineering
Total activity cost 220,000$ 117,000$ 21,000$ 105,000$ 102,000$
2.
Activity Activity Activity Activity Activity Activity
Activity
Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost Activity Base Usage Rate =Cost
Production 400 mh $200 80,000$ 500 mh $200 100,000$ 200 mh $200 40,000$
Setup 80 setups $450 36,000 30 setups $450 13,500 150 setups $450 67,500
3.
Problem 25-7B
Name:
Solution
Section:
Specialty Paper
The unit costs are different even though each product requires 0.4 machine hour
because the products consume many activities in ratios different from the volume. For
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Instructions
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Computer Paper
Newsprint
ON
