Ch9
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Ch9

Course Number: ACC ACC 101A, Spring 2010

College/University: UC Riverside

Word Count: 9729

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Chapter 9 Differential Analysis and Product Pricing OBJECTIVES Obj 1 Obj 2 Obj 3 Prepare a differential analysis report for decisions involving leasing or selling equipment, discontinuing an unprofitable segment, manufacturing or purchasing a needed part, replacing usable fixed assets, processing further or selling an intermediate product, or accepting additional business at a special price. Determine the...

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9 Chapter Differential Analysis and Product Pricing OBJECTIVES Obj 1 Obj 2 Obj 3 Prepare a differential analysis report for decisions involving leasing or selling equipment, discontinuing an unprofitable segment, manufacturing or purchasing a needed part, replacing usable fixed assets, processing further or selling an intermediate product, or accepting additional business at a special price. Determine the selling price of a product, using the total cost, product cost, variable cost, and target cost concepts. Calculate the relative profitability of products in bottleneck production environments. QUESTION GRID True / False No. Objective 1 24(9)-01 2 24(9)-01 3 24(9)-01 4 24(9)-01 5 24(9)-01 6 24(9)-01 7 24(9)-01 8 24(9)-01 9 24(9)-01 10 24(9)-01 11 24(9)-01 12 24(9)-01 13 24(9)-01 14 24(9)-01 Difficulty Easy Easy Difficult Difficult Difficult Difficult Difficult Difficult Easy Difficult Easy Easy Easy Difficult No. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Objective 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-01 24(9)-02 24(9)-02 24(9)-02 Difficulty Difficult Difficult Difficult Easy Easy Easy Easy Easy Easy Easy Moderate Easy Easy Easy No. 29 30 31 32 33 34 35 36 37 38 39 40 Objective 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-03 24(9)-03 24(9)-03 24(9)-03 24(9)-03 Difficulty Easy Easy Easy Easy Easy Difficult Difficult Easy Easy Moderate Moderate Moderate 72 73 3 Chapter 9 Differential Analysis and Product Pricing Multiple Choice No. Objective 1 24(9)-01 2 24(9)-01 3 24(9)-01 4 24(9)-01 5 24(9)-01 6 24(9)-01 7 24(9)-01 8 24(9)-01 9 24(9)-01 10 24(9)-01 11 24(9)-01 12 24(9)-01 13 24(9)-01 14 24(9)-01 15 24(9)-01 16 24(9)-01 17 24(9)-01 18 24(9)-01 19 24(9)-01 20 24(9)-01 21 24(9)-02 22 24(9)-02 23 24(9)-02 24 24(9)-02 25 24(9)-02 26 24(9)-02 Exercise/Other No. Objective 1 24(9)-01 2 24(9)-01 3 24(9)-01 4 24(9)-01 Problem No. Objective 1 24(9)-01 2 24(9)-01 3 24(9)-01 4 24(9)-01 5 24(9)-01 Difficulty Easy Easy Easy Moderate Moderate Moderate Moderate Easy Difficult Difficult Difficult Difficult Difficult Difficult Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Easy Moderate Moderate Difficulty Moderate Easy Easy Moderate Difficulty Moderate Moderate Moderate Moderate Easy No. 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 No. 5 6 7 8 No. 6 7 8 9 10 Objective 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 Objective 24(9)-01 24(9)-01 24(9)-02 24(9)-02 Objective 24(9)-01 24(9)-02 24(9)-02 24(9)-02 24(9)-02 Difficulty Moderate Moderate Moderate Moderate Moderate Easy Moderate Easy Easy Easy Moderate Difficult Moderate Difficult Easy Easy Easy Easy Easy Difficult Difficult Difficult Easy Easy Easy Moderate No. 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 Objective 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-02 24(9)-03 24(9)-03 24(9)-03 24(9)-03 24(9)-03 24(9)-03 24(9)-03 Difficulty Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Easy Easy Easy Easy Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Moderate Difficulty No. Objective Easy 9 24(9)-02 Easy 10 24(9)-03 Easy Moderate Difficulty Moderate Moderate Difficult Difficult Difficult No. 11 12 13 14 15 Objective 24(9)-02 24(9)-02 24(9)-02 24(9)-03 24(9)-03 Difficulty Moderate Moderate Difficulty Difficult Difficult Difficult Difficult Difficult Chapter 9 Differential Analysis and Product Pricing 3 74 Chapter 9Differential Analysis and Product Pricing TRUE/FALSE 1. Differential revenue is the amount of income that would result from the best available alternative proposed use of cash. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 2. Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 3. If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48, the differential cost for this situation is $48. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 4. If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48, the differential cost for this situation is $12. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis Hill Co. can further process Product O to produce Product P. Product O is currently selling for $60 per pound and costs $42 per pound to produce. Product P would sell for $82 per pound and would require an additional cost of $13 per pound to produce. 5. The differential revenue of producing Product P is $82 per pound. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 6. The differential revenue of producing Product P is $22 per pound. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 7. The differential cost of producing Product P is $13 per pound. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 8. The differential cost of producing Product P is $55 per pound. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 9. Opportunity cost is the amount of increase or decrease in cost that would result from the best available alternative to the proposed use of cash or its equivalent. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 75 3 Chapter 9 Differential Analysis and Product Pricing 10. Differential analysis can aid management in making decisions on a variety of alternatives, including whether to discontinue an unprofitable segment and whether to replace usable plant assets. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 11. A cost that will not be affected by later decisions is termed a sunk cost. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 12. A cost that will not be affected by later decisions is termed an opportunity cost. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 13. The amount of income that would result from an alternative use of cash is called opportunity cost. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 14. Since the costs of producing an intermediate product do not change regardless of whether the intermediate product is sold or processed further, these costs are not considered in deciding whether to further process a product. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 15. The costs of initially producing an intermediate product should be considered in deciding whether to further process a product, even though the costs will not change, regardless of the decision. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 16. In deciding whether to accept business at a special price, the short-run price should be set high enough to cover all costs and expenses, plus provide a reasonable amount for profit. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 17. In deciding whether to accept business at a special price, the short-run price should be set high enough to cover all variable costs and expenses. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 18. Eliminating a product or segment may have the long-term effect of reducing fixed costs. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 19. Make or buy options often arise when a manufacturer has excess productive capacity in the form of unused equipment, space, and labor. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 76 20. In addition to the differential costs in an equipment replacement decision, the remaining useful life of the old equipment and the estimated life of the new equipment are important considerations. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 21. Manufacturers must conform to the Robinson-Patman Act which prohibits price discrimination within the United States unless differences in prices can be justified by different costs of serving different customers. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 22. When a company is showing a net loss, it is always best to discontinue the segment in order not to continue with losses. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 23. Discontinuing a segment or product may not be the best choice when the segment is contributing to fixed expenses. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 24. Make or buy decisions should be made only with related parties. Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 25. Depending on the capacity of the plant, a company may best be served by further processing some of the product and leaving the rest as is, with no further processing. Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 26. A practical approach which is frequently used by managers when setting normal long-run prices is the cost-plus approach. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 27. The total cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 28. The product cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 29. The product cost concept includes all manufacturing costs in the cost amount to which the markup is added to determine product price. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 77 3 Chapter 9 Differential Analysis and Product Pricing 30. In using the total cost concept of applying the cost-plus approach to product pricing, selling expenses, administrative expenses, and profit are covered in the markup. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 31. In using the product cost concept of applying the cost-plus approach to product pricing, selling expenses, administrative expenses, and profit are covered in the markup. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 32. In using the variable cost concept of applying the cost-plus approach to product pricing, fixed manufacturing costs and fixed selling and administrative expenses must be covered by the markup. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 33. In using the variable cost concept of applying the cost-plus approach to product pricing, fixed manufacturing costs and both fixed and variable selling and administrative expenses must be covered by the markup. Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 34. When standard costs are used in applying the cost-plus approach to product pricing, the standards should be based upon normal levels of performance. Register to View AnswerDIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 35. When standard costs are used in applying the cost-plus approach to product pricing, the standards should be based upon ideal levels of performance. Register to View AnswerDIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 36. A bottleneck begins when demand for the companys product exceeds the ability to produce the product. Register to View AnswerDIF: Easy OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 37. A bottleneck happens when an employee is too slow to keep with current production. Register to View AnswerDIF: Easy OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 38. When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour. Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 39. The theory of constraints is a manufacturing strategy that focuses on reducing the influence of bottlenecks on a process. Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 78 40. The lowest contribution margin per scarce resource is the most profitable. Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis MULTIPLE CHOICE 1. The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed: a. manufacturing margin b. contribution margin c. differential cost d. differential revenue Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 2. The amount of increase or decrease in cost that is expected from a particular course of action as compared with an alternative is termed: a. period cost b. product cost c. differential cost d. discretionary cost Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 3. A cost that will not be affected by later decisions is termed a(n): a. historical cost b. differential cost c. sunk cost d. replacement cost Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 79 3 Chapter 9 Differential Analysis and Product Pricing 4. The condensed income statement for a business for the past year is presented as follows: Product Sales Less variable costs Contribution margin Less fixed costs Income (loss) from oper. F $300,000 180,000 $120,000 50,000 $ 70,000 G $220,000 190,000 $ 30,000 50,000 $ (20,000) H $340,000 220,000 $120,000 40,000 $ 80,000 Total $860,000 590,000 $270,000 140,000 $130,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G? a. $20,000 increase b. $30,000 increase c. $20,000 decrease d. $30,000 decrease Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 5. The condensed income statement for a business for the past year is as follows: Product T $600,000 540,000 $ 60,000 145,000 $ (85,000) U $320,000 220,000 $100,000 40,000 $ 60,000 Sales Less variable costs Contribution margin Less fixed costs Income (loss) from operations Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T? a. $60,000 increase b. $85,000 increase c. $85,000 decrease d. $60,000 decrease Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 80 6. A business is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $12, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a. $150,000 cost increase b. $ 90,000 cost decrease c. $150,000 cost increase d. $ 90,000 cost increase Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 7. A business is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36, including fixed costs, and $28, not including fixed costs. If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a. $60,000 cost decrease b. $180,000 cost increase c. $60,000 cost increase d. $180,000 cost decrease Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 8. The amount of income that would result from an alternative use of cash is called: a. differential income b. sunk cost c. differential revenue d. opportunity cost Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 9. Jones Co. can further process Product B to produce Product C. Product B is currently selling for $30 per pound and costs $28 per pound to produce. Product C would sell for $60 per pound and would require an additional cost of $24 per pound to produce. What is the differential cost of producing Product C? a. $30 per pound b. $24 per pound c. $28 per pound d. $60 per pound Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 81 3 Chapter 9 Differential Analysis and Product Pricing Neter Co. can further process Product J to produce Product D. Product J is currently selling for $21 per pound and costs $15.75 per pound to produce. Product D would sell for $35 per pound and would require an additional cost of $8.75 per pound to produce. 10. What is the differential cost of producing Product D? a. $7 per pound b. $8.75 per pound c. $15 per pound d. $5.25 per pound Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 11. What is the differential revenue of producing Product D? a. $7 per pound b. $8.75 per pound c. $14 per pound d. $5.25 per pound Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 12. Jones Co. can further process Product B to produce Product C. Product B is currently selling for $60 per pound and costs $42 per pound to produce. Product C would sell for $82 per pound and would require an additional cost of $13 per pound to produce. What is the differential revenue of producing and selling Product C? a. $22 per pound b. $42 per pound c. $45 per pound d. $18 per pound Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 13. Wilson Company is considering replacing equipment which originally cost $500,000 and which has $460,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation? a. $330,000 b. $500,000 c. $40,000 d. $290,000 Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 14. Mathews Company is considering replacing equipment which originally cost $500,000 and which has $460,000 accumulated depreciation to date. A new machine will cost $790,000 and the old equipment can be sold for $8,000. What is the sunk cost in this situation? a. $53,000 b. $40,000 c. $37,000 d. $290,000 Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 82 15. A business is considering a cash outlay of $200,000 for the purchase of land, which it could lease for $35,000 per year. If alternative investments are available which yield an 18% return, the opportunity cost of the purchase of the land is: a. $35,000 b. $36,000 c. $ 1,000 d. $37,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 16. A business is considering a cash outlay of $250,000 for the purchase of land, which it could lease for $36,000 per year. If alternative investments are available which yield an 18% return, the opportunity cost of the purchase of the land is: a. $45,000 b. $36,000 c. $ 9,000 d. $54,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 17. A business is considering a cash outlay of $500,000 for the purchase of land, which it could lease for $40,000 per year. If alternative investments are available which yield a 21% return, the opportunity cost of the purchase of the land is: a. $105,000 b. $ 40,000 c. $ 65,000 d. $ 8,400 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 18. A business received an offer from an exporter for 20,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price Unit manufacturing costs: Variable Fixed What is the differential revenue from the acceptance of the offer? a. $300,000 b. $420,000 c. $120,000 d. $240,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis $21 12 5 83 3 Chapter 9 Differential Analysis and Product Pricing A business received an offer from an exporter for 10,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price Unit manufacturing costs: Variable Fixed 19. What is the differential revenue from the acceptance of the offer? a. $200,000 b. $160,000 c. $130,000 d. $140,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 20. What is the differential cost from the acceptance of the offer? a. $200,000 b. $160,000 c. $140,000 d. $130,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 21. What is the amount of gain or loss from acceptance of the offer? a. $30,000 gain b. $40,000 loss c. $30,000 loss d. $20,000 loss Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis A business received an offer from an exporter for 20,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price Unit manufacturing costs: Variable Fixed 22. What is the differential cost from the acceptance of the offer? a. $120,000 b. $240,000 c. $300,000 d. $420,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis $21 12 5 $20 13 1 Chapter 9 Differential Analysis and Product Pricing 3 84 23. What is the amount of the gain or loss from acceptance of the offer? a. $35,000 loss b. $40,000 gain c. $60,000 gain d. $50,000 gain Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 24. Relevant revenues and costs focus on: a. activities that occurred in the past b. monies already earned and/or spent c. last year's net income d. differences between the alternatives being considered Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 25. Assume that Darrow Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Darrow Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Minton Co. has offered to lease the equipment for five years for a total of $48,750. Darrow will incur repair, insurance, and property tax expenses estimated at $10,000. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is: a. $15,000 b. $ 5,000 c. $25,000 d. $12,500 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 26. Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $5 a unit. The unit cost for Frank Co. to make the part is $6, which includes $.40 of fixed costs. If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it? a. $12,000 cost decrease b. $20,000 cost increase c. $20,000 cost decrease d. $2,400 cost increase Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 27. Franklin and Johnson, CPAs, currently work a five-day week. They estimate that net income for the firm would increase by $45,000 annually if they worked an additional day each month. The cost associated with the decision to continue the practice of a five-day work week is an example of: a. differential revenue b. sunk cost c. differential income d. opportunity cost Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 85 3 Chapter 9 Differential Analysis and Product Pricing 28. Benson Co. is considering disposing of a machine with a book value of $12,500 and estimated remaining life of five years. The old machine can be sold for $1,500. A new high-speed machine can be purchased at a cost of $25,000. It will have a useful life of five years and no residual value. It is estimated that variable manufacturing costs will be reduced from $26,000 to $23,500 if the new machine is purchased. The total net differential increase or decrease in cost for the new equipment for the entire five years is: a. decrease of $11,000 b. decrease of $15,000 c. increase of $11,000 d. increase of $15,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 29. Sorrentino Inc. is considering disposing of a machine with a book value of $22,500 and an estimated remaining life of three years. The old machine can be sold for $6,250. A new machine with a purchase price of $68,750 is being considered as a replacement. It will have a useful life of three years and no residual value. It is estimated that variable manufacturing costs will be reduced from $43,750 to $20,000 if the new machine is purchased. The net differential increase or decrease in cost for the entire three years for the new equipment is: a. $8,750 increase b. $31,250 decrease c. $8,750 decrease d. $2,925 decrease Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis Dary Co. Produces a single product. Its normal selling price is $28 per unit. The variable costs are $18 per unit. Fixed costs are $20,000 for a normal production run of 5,000 units per month. Dary received a request for a special order that would not interfere with normal sales. The order was for 1,500 units and a special price of $17.50 per unit. Dary Co. has the capacity to handle the special order and, for this order, a variable selling cost of $2 per unit would be eliminated. 30. If the order is accepted, what would be the impact on net income? a. decrease of $750 b. decrease of $6,750 c. increase of $2,250 d. increase of $1,500 Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 31. Should the special order be accepted? a. Cannot determine from the data given b. Yes c. No d. There would be no difference in accepting or rejecting the special order Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 86 32. Java, Inc has bought a new server and is having to decide what to do with the old one. The cost of the old server was originally $60,000 and has been depreciated $45,000. The company has received two offers that it must consider. One offer was made to purchase the equipment outright for $18,500 less a 5% sales commission. The other offer was to lease the equipment for $7,000 for the next five years but the company will be required to provide maintenance and insurance totaling $3,000 per year. What offer should Java, Inc. accept? a. $2,425 in favor of leasing b. Reject both offers c. $11,500 in favor of selling d. $16,500 in favor of leasing Register to View AnswerDifferential Revenue: Revenue from lease ($7,000 * 5 years) $ 35,000 Revenue from sale 18,500 Differential revenue from lease $ 16,500 Differential Costs Maintenance and Insurance ($3000 * 5) Commission Expense on Sale ($18,500* 5%) Net differential income from the lease alternative DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 33. Security Fire Alarm is currently buying 50,000 motherboard from MotherBoards Inc at a price of $65 per board. It was suggested at the last managers meeting that the company should consider making its own boards. The costs to make the part are as follows: Direct Materials $32 per unit, Direct labor $10 per unit, Variable Factory Overhead $16.00, Fixed Costs for the plant would increase by $75,000. As the financial advisor, what would you recommend? a. Buy - $75,000 more in profits b. Make - $275,000 increase in profits c. Buy - $275,000 more in profits d. Make - $350,000 increase in profits Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis $15,000 925 $ 14,075 $ 2,425 87 3 Chapter 9 Differential Analysis and Product Pricing 34. Carnival Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine originally cost $5,000 and has been fully depreciated. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 and annual operating costs would be $1,500. Both machines have an estimated useful life of 5 years. a. Stay with the old equipment $3,500 less in net costs b. Purchase the new equipment $3,500 cost savings c. Purchase the new equipment - deduction in costs $14,500 d. Stay with the old equipment - cost savings of $2,000 Register to View AnswerProposal to Replace Equipment October 30, 2008 Annual variable costs - present equipment Annual variable costs - new equipment Annual differential decrease in cost Number of years applicable Total differential decrease in cost Proceeds from sales of present equipment Cost of New Equipment Annual net differential increase in cost - new equipment DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis $4,000 1,500 $2,500 5 $12,500 2,000 $14,500 18,000 ( $ 3,500) Chapter 9 Differential Analysis and Product Pricing 3 88 35. Sandy Art Company sells unfinished wooden decorations at a price of $15.00. The current profit margin is $5.00 per decoration. The company is considering taking individual orders and customizing them for sale. To finish the decoration the company would have to pay additional labor of $3.00, additional materials costing an average of $4.00 per unit and fixed costs would increase by $1,500. If the company estimates that it can sell 600 units for $25 each month, would they make additional profits or losses? a. $300 profit b. $300 loss c. $800 profit d. $800 loss Register to View AnswerProposal to Process Decorations Further September 3, 2009 Differential revenue: Revenue for finished decorations (600 units * $25.) Revenue for unfinished decorations ( 600 units * $15) Differential Revenue Differential cost: Direct Materials (600 units * $3.00) Direct Labor (600 * $4.00) Additional Fixed Costs Differential income from further processing DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 36. Safe Security Company manufacturers home alarms. Currently it is manufacturing one of its components at a variable cost of $45 and fixed costs of $15 per unit. An outside provider of this component has offered to sell Safe Security the component for $50. Determine the best plan and calculate the savings. a. $5 savings per unit - Manufacture b. $5 savings per unit - Purchase c. $10 savings per unit - Manufacture d. $15 savings per unit - Purchase Register to View AnswerDIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 37. Discontinuing a product or segment is a huge decision that must be carefully analyzed. Which of the following would be a valid reason not to discontinue an operation? a. when the losses are minimal b. when the variable costs are less than revenues c. when the variable costs are more than revenues d. when fixed costs are more than revenues Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis $15,000 9,000 $ 6,000 $1,800 2,400 1,500 $ 5,700 $ 300 89 3 Chapter 9 Differential Analysis and Product Pricing 38. Which of the following would be considered a sunk cost? a. Purchase of new equipment b. Equipment rental for the production area c. Net book value of obsolete equipment that has no market value d. Depreciation expense Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 39. All of the following should be considered in a make or buy decision except a. cost savings b. quality issues with the supplier c. future growth in the plant and other production opportunities d. the supplier will make a profit that would no longer belong to the business Register to View AnswerDIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 40. A business may decide to accept additional business at a special price for all of the following reasons except a. if additional sales will not conflict with regular sales. b. if additional sales will increase differential income. c. if there is an increase to sales only if fixed expenses are not increased. d. if there is an increase to sales even if fixed expenses are also increased. Register to View AnswerDIF: Difficult OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 41. A practical approach which is frequently used by managers when setting normal long-run prices is the: a. cost-plus approach b. economic theory approach c. price graph approach d. market price approach Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 42. Which of the following is NOT a cost concept commonly used in applying the cost-plus approach to product pricing? a. Total cost concept b. Product cost concept c. Variable cost concept d. Fixed cost concept Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis Product and Pricing 3 90 43. In using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup? a. Total selling and administrative expenses plus desired profit b. Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit c. Total costs plus desired profit d. Desired profit Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 44. In using the product cost concept of applying the cost-plus approach to product pricing, what is included in the markup? a. Desired profit b. Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit c. Total costs plus desired profit d. Total selling and administrative expenses plus desired profit Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 45. In using the variable cost concept of applying the cost-plus approach to product pricing, what is included in the markup? a. Total costs plus desired profit b. Desired profit c. Total selling and administrative expenses plus desired profit d. Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 46. What cost concept used in applying the cost-plus approach to product pricing covers selling expenses, administrative expenses, and desired profit in the "markup"? a. Total cost concept b. Product cost concept c. Variable cost concept d. Sunk cost concept Register to View AnswerDIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 47. What cost concept used in applying the cost-plus approach to product pricing includes only desired profit in the "markup"? a. Product cost concept b. Variable cost concept c. Sunk cost concept d. Total cost concept Register to View AnswerDIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 91 3 Chapter 9 Differential Analysis and Product Pricing 48. What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturing costs in the "cost" amount to which the markup is added? a. Variable cost concept b. Total cost concept c. Product cost concept d. Opportunity cost concept Register to View AnswerDIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 49. Managers who often make special pricing decisions are more likely to use which of the following cost concepts in their work? a. Total cost b. Product cost c. Variable cost d. Fixed cost Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 50. Defense contractors would be more likely to use which of the following cost concepts in pricing their product? a. Variable cost b. Product cost c. Total cost d. Fixed cost Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 51. In contrast to the total product and variable cost concepts used in setting seller's prices, the target cost approach assumes that: a. a markup is added to total cost b. selling price is set by the marketplace c. a markup is added to variable cost d. a markup is added to product cost Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 92 McClelland Corporation uses the total cost concept of product pricing. Below is cost information for the production and sale of 60,000 units of its sole product. McClelland desires a profit equal to a 21% rate of return on invested assets of $600,000. Fixed factory overhead cost Fixed selling and administrative costs Variable direct materials cost per unit Variable direct labor cost per unit Variable factory overhead cost per unit Variable selling and administrative cost per unit $37,500 7,500 4.50 1.88 1.13 4.50 52. The dollar amount of desired profit from the production and sale of the company's product is: a. $126,000 b. $67,200 c. $73,500 d. $96,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 53. The cost per unit for the production and sale of the company's product is: a. $12 b. $12.76 c. $15 d. $13.50 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 54. The markup percentage for the company's product is: a. 21.0% b. 16.5% c. 15.7% d. 24.0% Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic |IMA-Decision Analysis 55. The unit selling price for the company's product is: a. $15.00 b. $13.82 c. $14.86 d. $14.76 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 93 3 Chapter 9 Differential Analysis and Product Pricing Mendoza Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Mendoza desires a profit equal to a 10.8% rate of return on invested assets of $900,000. Fixed factory overhead cost Fixed selling and administrative costs Variable direct materials cost per unit Variable direct labor cost per unit Variable factory overhead cost per unit Variable selling and administrative cost per unit $72,000 45,000 4.50 7.65 2.25 .90 56. The dollar amount of desired profit from the production and sale of the company's product is: a. $105,840 b. $225,000 c. $ 97,200 d. $220,500 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 57. The cost per unit for the production of the company's product is: a. $14.40 b. $16.00 c. $15.30 d. $15.75 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 58. The markup percentage for the company's product is: a. 25.38% b. 10.98% c. 26.1% d. 18% Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 59. The unit selling price for the company's product is: a. $17.73 b. $15.75 c. $22.05 d. $20.06 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 94 Elfrink Corporation uses the variable cost concept of product pricing. Below is cost information for the production and sale of 35,000 units of its sole product. Elfrink desires a profit equal to a 11.2% rate of return on invested assets of $350,000. Fixed factory overhead cost Fixed selling and administrative costs Variable direct materials cost per unit Variable direct labor cost per unit Variable factory overhead cost per unit Variable selling and administrative cost per unit $105,000 35,000 4.34 5.18 .98 .70 60. The dollar amount of desired profit from the production and sale of the company's product is: a. $89,600 b. $39,200 c. $70,000 d. $84,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 61. The variable cost per unit for the production and sale of the company's product is: a. $14.00 b. $12.60 c. $ 9.80 d. $11.20 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 62. The markup percentage for the sale of the company's product is: a. 14% b. 5.6% c. 45.71% d. 11.2% Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 63. The unit selling price for the company's product is: a. $16.32 b. $13.44 c. $12.10 d. $13.72 Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 95 3 Chapter 9 Differential Analysis and Product Pricing 64. What pricing method may be used if there are several providers in the same market and there is sufficient demand for your product? a. Demand-based method b. Total cost method c. Cost-plus method d. Competition-based method Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 65. What pricing method is used if all costs are considered and a fair mark-up is added to determine the selling price? a. Total cost method b. Demand-based method c. Variable cost method d. Mark-up method Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 66. Using the variable cost concept determine the selling price for 30,000 units using the following data: Variable cost per unit $13.00, $120,000 desired profit, and total fixed costs $80,000. a. $20.00 b. $21.67 c. $17.00 d. $19.67 Register to View AnswerDesired profit + Total fixed costs Markup percentage = Total Variable Costs MP = $120, 000 + 80, 000 = 51.3% $390, 000 $13.00 * 51.3%= 6.66 $13 + $6.67 =$19.67 Selling price = SP = DIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 67. Which equation better describes Target Costing? a. Selling Price - Desired Profit = Target Costs b. Selling Price - Target Costs = Profit c. Target Variable Costs + Contribution Margin = Selling Price d. Selling Price = Target Variable Costs + Target Fixed Costs + Profit Register to View AnswerDIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 96 The Koko Company produces their product at a total cost of $43 per unit. Of this amount $8 per unit is selling and administrative costs. The total variable cost is $30 per unit The desired profit is $20 per unit. 68. Determine the mark up percentage on product cost. a. 80% b. 46% c. 70% d. 65% Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 69. Determine the mark up percentage on variable cost. a. 100% b. 110% c. 80% d. 57% Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 70. Target costing is arrived at by a. taking the selling price and subtracting desired profit. b. taking the selling price and adding desired profit. c. taking the selling price and subtracting the budget standard cost. d. taking the budget standard cost and reducing it by 10%. Register to View AnswerDIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 71. Soap Company manufactures Soap X and Soap Y and can sell all it can make of either. Based on the following data, which statement is true? Sales Price Variable Cost Hours needed to process a. b. c. d. ANS: NAT: X is more profitable than Y Y is more profitable than X Neither X nor Y have a positive contribution margin. X and Y are equally profitable. B DIF: Moderate OBJ: 24(9)-03 AACSB Analytic | IMA-Decision Analysis X $32 22 5 Y $40 24 8 97 3 Chapter 9 Differential Analysis and Product Pricing Niva Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: 55; 78; and 32, respectively. The variable costs for each product are: 20; 50; and 15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 7 hours to process, Tales take 4 hours, and Wales take 1 hour. 72. Which product has the highest contribution margin per machine hour? a. Bales b. Tales c. Wales d. Bales and Tales have the same Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 73. What is the contribution margin per machine hour for Bales? a. $7 b. $5 c. $35 d. $28 Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 74. What is the contribution margin per machine hour for Tales? a. $7 b. $5 c. $28 d. $35 Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 75. What is the contribution per machine hour for Wales? a. $35 b. $28 c. $17 d. $8.50 Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 76. Assuming that Niva Co. can sell all of the products they can make, what is the maximum contribution margin they can earn per month? a. $64,000 b. $70,000 c. $56,000 d. $34,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 98 77. Assuming that Niva produced enough product with the highest contribution margin per unit to use 1,000 hours of machine time. Product demand does not warrant any more production of that product. What is the maximum additional contribution margin that can be realized by utilizing the remaining 1,000 hours on the product with the second highest contribution margin per hour? a. $5,000 b. $7,000 c. $4,000 d. $28,000 Register to View AnswerDIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis EXERCISE/OTHER 1. The Delicious Cake Factory owns a building for its operations. Delicious uses only half of the building and is considering two options that have been presented to them. The Candy Store would like to purchase the half of the building that is not being used for $550,000. A 7% commission would have to be paid at the time of purchase. Ice Cream Delight would like to lease the half of the building for the next 5 years at $100,000 each year. Delicious would have to continue paying $9,000 of property taxes each year and $1,000 of yearly insurance on the property, according to the proposed lease agreement. Determine the differentia income or loss from the lease alternative. ANS: Differential revenue from alternatives: Revenue from lease $500,000 Revenue from sale 550,000 Differential loss from lease Differential cost of alternatives: Property tax and insurance $50,000 Commission expense 38,500 Differential cost of lease Net differential loss from the lease alternative DIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis TOP: (50,000) (11,500) ($61,500) Example Exercise 24(9)-1 99 3 Chapter 9 Differential Analysis and Product Pricing Koko Company Division B recorded sales of $350,000, variable cost of goods sold of $315,000, variable selling expenses of $13,000, and fixed costs of $60,000, creating a loss from operations of $38,000. Determine (a) the differential income or loss from the sales of Division B and (b) should this division be discontinued? ANS: (a) Differential revenue $350,000 Differential costs: Variable cost of goods sold $315,000 Variable selling expenses 13,000 328,000 Annual differential income Division B 22,000 (b) Division B should not be discontinued. DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 3. TOP: Example Exercise 24(9)-2 2. Safe Security Company manufacturers home alarms. Currently it is manufacturing one of its components at a variable cost of $45 and fixed costs of $15 per unit. An outside provider of this component has offered to sell them the component for $30. Provide a differential analysis of the outside purchase proposal. ANS: Differential cost to purchase: Purchase price of the component $30 Differential cost to manufacture: Variable manufacturing costs $45 Cost savings from purchasing component $15 DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 4. TOP: Example Exercise 24(9)-3 An oven with a book value of $67,000 has an estimated 5 year life. A proposal is offered to sell the oven for $8,500 and replace it with a new oven for $115,000. The new machine has a five year life with no residual value. The new machine would reduce annual maintenance costs by $23,000. Provide a differential analysis on the proposal to replace the machine. ANS: Annual maintenance cost reduction $23,000 Number of years applicable 5 Total differential decrease in cost $115,000 Proceeds from sale of equipment 8,500 $123,500 Cost of new equipment 115,000 Net differential decrease in cost from replacing equipment $8,500 DIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis TOP: Example Exercise 24(9)-4 Chapter 9 Differential Analysis and Product Pricing 3 100 An unfinished desk is produced for $36.00 and sold for $65. An additional amount of $6.65 of processing can be added to the desk which will allow the company to sell the desk for $75. Provide a differential analysis for further processing. ANS: Differential revenue from further processing: Revenue per unfinished desk $65.00 Revenue per finished desk 75.00 Differential revenue $10.00 Differential cost per desk: Additional cost for producing 6.65 Differential income from further processing $3.35 DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 6. TOP: Example Exercise 24(9)-5 5. Delicious Cake Factory normally sells their specialty cake for $22. An offer to buy 100 cakes for $18 per cake was made by an organization hosting a national event in the city. The variable cost per cake is $12. A special decoration per cake will add another $1 to the cost. Determine the differential income or loss per cake from selling the cakes. ANS: Differential revenue: Revenue per cake $18 Differential cost: Variable manufacturing costs $12 Additional decoration 1 13 Differential income from accepting special order $5 DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 7. TOP: Example Exercise 24(9)-6 The Koko Company produces their product at a total cost of $50 per unit. Of this amount $14 per unit is selling and administrative costs. The total variable cost is $38 per unit The desired profit is $20 per unit. Determine the mark up percentage on total cost. ANS: Mark up percentage: $20 / $50 = 40% DIF: Easy OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 8. TOP: Example Exercise 24(9)-7 The Koko Company produces their product at a total cost of $50 per unit. Of this amount $14 per unit is selling and administrative costs. The total variable cost is $38 per unit The desired profit is $20 per unit. Determine the mark up percentage on product cost. ANS: Mark Up Percentage on Product cost = ($20 + 14) / $36 = 94 % DIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis TOP: Example Exercise 24(9)-8 101 3 Chapter 9 Differential Analysis and Product Pricing 9. The Koko Company produces their product at a total cost of $50 per unit. Of this amount $14 per unit is selling and administrative costs. The total variable cost is $38 per unit The desired profit is $20 per unit. Determine the mark up percentage on variable cost. ANS: Markup percentage on variable cost = ($20 + $12) / $38 = 84% DIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis TOP: Example Exercise 24(9)-9 10. Koko Company produces two products. Product A has a contribution margin of $20 and requires 4 machine hours. Product B has a contribution margin of $18 and requires 3 machine hours. Determine the most profitable product assuming the machine hours are the constraint. ANS: Product A Product B Contribution margin per unit $20 $18 Machine hours 4 3 Contribution margin per bottleneck hour $5 $6 Product B is the most profitable. DIF: Moderate OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis TOP: Example Exercise 24(9)-10 PROBLEM 1. Bell Company is considering the disposal of equipment that is no longer needed for operations. The equipment originally cost $600,000 and accumulated depreciation to date totals $460,000. An offer has been received to lease the machine for its remaining useful life for a total of $290,000, after which the equipment will have no salvage value. The repair, insurance, and property tax expenses during the period of the lease are estimated at $75,800. Alternatively, the equipment can be sold through a broker for $230,000 less a 10% commission. Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or sold. Chapter 9 Differential Analysis and Product Pricing 3 102 ANS: Bell Company Proposal to Lease or Sell Equipment June 15, 20-Net Revenue from leasing: Revenue from lease Costs associated with the lease Net revenue from lease Net Revenue from selling: Sales price Commission expense on sale Net from selling Net advantage of lease alternative DIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 2. Product J is one of the many products manufactured and sold by Goodstein Company. An income statement by product line for the past year indicated a net loss for Product J of $12,250. This net loss resulted from sales of $260,000, cost of goods sold of $186,500, and operating expenses of $85,750. It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed. If Product J is retained, the revenue, costs, and expenses are not expected to change significantly from those of the current year. However, because of the net loss, management is considering the elimination of the unprofitable endeavor. Because of the large number of products manufactured, the total fixed costs and expenses are not expected to decline significantly if Product J is discontinued. $290,000 75,800 $214,200 $230,000 23,000 $ 207,000 7,200 Prepare a differential analysis report, dated February 8 of the current year, on the proposal to discontinue Product J. ANS: Goodstein Company Proposal to Discontinue Product J February 8, 20-Differential revenue from annual sales of product: Revenue from sales Differential cost of annual sales of product: Variable cost of goods sold Variable operating expenses Annual differential income from sales of Product J DIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis $260,000 $130,550 51,450 182,000 $ 78,000 103 3 Chapter 9 Differential Analysis and Product Pricing 3. Pnok Company has been purchasing a component, Part Q, for $18.90 a unit. Pnok is currently operating at 70% of capacity and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q, determined by absorption costing methods, is estimated as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total $11.25 4.50 1.12 3.15 $20.02 Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q. ANS: Pnok Company Proposal to Manufacture Part Q March 12, 20-Purchase price of part Differential cost to manufacture part: Direct materials Direct labor Variable factory overhead Cost savings from manufacturing Part Q DIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 4. FDE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra large quantity of inventory on hand, it expects to produce only 30,000 units in May. Monthly fixed costs and expenses are $112,500 ($3 per unit at normal plant capacity) and variable costs and expenses are $8.25 per unit. The present selling price is $13.50 per unit. The company has an opportunity to sell 7,500 additional units at $9.90 per unit to an exporter who plans to market the product under its own brand name in a foreign market. The additional business is therefore not expected to affect the regular selling price or quantity of sales of FDE Manufacturing Company. Prepare a differential analysis report, dated April 21 of the current year, on the proposal to sell at the special price. $18.90 $11.25 4.50 1.12 16.87 $ 2.03 Chapter 9 Differential Analysis and Product Pricing 3 104 ANS: Proposal to Sell to Exporter April 21, 20-Differential revenue from accepting offer: Revenue from sale of 7,500 additional units at $9.90 Differential cost of accepting offer: Variable costs and expenses of 7,500 additional units at $8.25 Differential income from accepting offer DIF: Moderate OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 5. Due to Medicare reimbursement cuts, Nurturing Home Care is considering shutting down its Certified Nursing Assistant Division. Fixed costs will have to be transferred to the Nursing Division if the CNA division is discontinued. Currently, the fixed costs are shared equally. Using the Income Statement below, make a recommendation to the president regarding this decision. Nurturing Home Care Condensed Income Statement For the Year Ended December 31, 2007 Nursing Revenues Variable Costs Fixed Costs Net Income from operations ANS: Proposal to Discontinue CNAs December 31, 2007 Differential revenue from annual revenue from CNAs Differential variable costs from CNAs Annual differential income from CNAs revenue $900,000 800,000 $100,000 $3,500,000 2,000,000 400,000 $1,100,000 CNAs $900,000 800,000 400,000 ($300,000) Total $4,400,000 2,800,000 800,000 $ 800,000 $74,250 61,875 $12,375 Keep for now as operating income would decrease by $100,000 if the CNA division were discontinued. DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 105 3 Chapter 9 Differential Analysis and Product Pricing 6. Christmas Decorations Unique has been approached by the community college to make special decorations for the faculty and staff. The college is willing to buy 5,000 Christmas ornaments with their own design for $5 a piece. The company normally sells its decorations for $12.00 each. A break down of their costs is as follows: Direct Materials Direct Labor Variable Costs Fixed Costs Total Cost Per Unit $2.00 .50 1.00 _1.75 $5.25 Should Christmas Decorations Unique accept the special order made by the college? The company has enough excess capacity to make this order. ANS: Proposal to Sell Christmas Decorations to College November 5, 2008 Differential Revenue from accepting offer (5,000 * $5) Differential variable costs of additional units (5,000 * $3.50) Differential income from accepting the offer DIF: Easy OBJ: 24(9)-01 NAT: AACSB Analytic | IMA-Decision Analysis 7. The Koko Company produces their product at a total cost of $86 per unit. Of this amount $15 per unit is selling and administrative costs. The total variable cost is $60 per unit The desired profit is $25 per unit. Determine the mark up percentage on (a) total cost, (b) product cost and (c) variable cost concepts. ANS: (a) $25 / $86 = 29% (b) ($25 + $15) / $71 = 56% (c) ($25 + $26) / $60 = 85% DIF: Moderate OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis $25,000 17,500 $ 7,500 Chapter 9 Differential Analysis and Product Pricing 3 106 8. Mavis Company uses the total cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 38,400 units of Product E are as follows: Variable costs: Direct materials Direct labor Factory overhead Selling and administrative expenses Total Fixed costs: Factory overhead Selling and administrative expenses Mavis desires a profit equal to a 14% rate of return on invested assets of $640,000. (a) (b) (c) (d) Determine the amount of desired profit from the production and sale of Product E. Determine the total costs and the cost amount per unit for the production and sale of 38,400 units of Product E. Determine the markup percentage for Product E. Determine the selling price of Product E. $ 4.70 2.50 1.90 2.60 $ 11.70 $80,000 14,000 ANS: (a) $89,600 ($640,000 14%) (b) Total costs: Variable ($11.70 38,400 units) Fixed ($80,000 + $14,000) Total Cost amount per unit: $543,280/38,400 units Markup Percentage Markup Percentage Markup Percentage (d) Cost amount per unit Markup ($14.15 16.5%) Selling price = = = Desired Profit Total Costs $89,600 $543,280 16.5% $14.15 2.33 $16.48 $449,280 94,000 $543,280 $ 14.15 (c) DIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 107 3 Chapter 9 Differential Analysis and Product Pricing 9. Moreland Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Variable costs: Direct materials Direct labor Factory overhead Selling and administrative expenses Total Fixed costs: Factory overhead Selling and administrative expenses Moreland desires a profit equal to a 5% rate of return on invested assets of $642,500. (a) (b) (c) (d) Determine the amount of desired profit from the production and sale of Product K. Determine the total manufacturing costs and the cost amount per unit for the production and sale of 25,000 units of Product K. Determine the markup percentage for Product K. Determine the selling price of Product K. $2.50 4.25 1.25 .50 $8.50 $25,000 17,000 ANS: (a) $32,125 ($642,500 5%) (b) Total manufacturing costs: Variable ($8.00 25,000 units) Fixed factory overhead Total Cost amount per unit: $225,000/25,000 units $200,000 25,000 $225,000 $ 9.00 (c) Total Manufacturing Costs $225,000 $225,000 Markup Percentage = $ 61,625 = 27.4% $225,000 (d) Cost amount per unit Markup ($9.00 27.4%) Selling price $ 9.00 2.47 $11.47 DIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 108 10. Star Company uses the variable cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 75,000 units of Product T are as follows: Variable costs: Direct materials Direct labor Factory overhead Selling and administrative expenses Total Fixed costs: Factory overhead Selling and administrative expenses Star desires a profit equal to a 18% rate of return on invested assets of $1,440,000. (a) (b) (c) (d) Determine the amount of desired profit from the production and sale of Product T. Determine the total variable costs for the production and sale of 75,000 units of Product T. Determine the markup percentage for Product T. Determine the unit selling price of Product T. $ 7.00 3.50 1.50 3.00 $ 15.00 $45,000 20,000 ANS: (a) $259,200($1,440,000 18%) (b) (c) Total variable costs: $15.00 75,000 units = $1,125,000 Markup Percentage = Desired Profit + Total Fixed Costs Total Variable Costs Markup Percentage = $259,200 + $45,000 + $20,000 $1,125,000 Markup Percentage = $324,200 $1,125,000 Markup Percentage = 28.8% (d) Cost amount per unit Markup ($15 28.8%) Selling price $15.00 4.32 $19.32 DIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 109 3 Chapter 9 Differential Analysis and Product Pricing 11. Carrigan Inc. manufactures Product B, incurring variable costs of $15.00 per unit and fixed costs of $70,000. Carrigan desires a profit equal to a 12% rate of return on assets, $785,000 of assets are devoted to producing Product B, and 100,000 units are expected to be produced and sold. (a) (b) Compute the markup percentage, using the total cost concept. Compute the selling price of Product B. ANS: (a) Markup Percentage = Desired Profit Total Costs Markup Percentage = Markup Percentage = $785,000 .12 ($15 100,000) + $70,000 $94,200 $1,570,000 Markup Percentage = 6% (b) Cost amount per unit Markup ($15.70 6%) Selling price of Product B $15.70 .94 $16.64 DIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 110 12. Linderman Co. produces an automotive product and incurs total manufacturing costs of $2,500,000 in the production of 80,000 units. The company desires to earn a profit equal to a 12% rate of return on assets. Linderman employs $960,000 of assets to manufacture the product. Total selling and administrative expenses are $105,000. (a) (b) Calculate the markup percentage, using the product cost concept. Compute the price of the automotive product. ANS: (a) Markup Percentage = Desired Profit + Total Selling and Administrative Expenses Total Manufacturing Costs Markup Percentage = $115,200 + $105,000 $2,500,000 Markup Percentage = $220,200 $2,500,000 Markup Percentage = 8.8% (b) Cost amount per unit Markup ($31.25 8.8%) Selling price $31.25 2.75 $34.00 DIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis 111 3 Chapter 9 Differential Analysis and Product Pricing 13. Sacks Co. manufactures mobile cellular equipment and develops a price for the product by using a variable cost concept. Sacks incurs variable costs of $1,900,000 in the production of 100,000 units. Fixed costs total $50,000. The company employs $4,725,000 of assets and wishes to earn a profit equal to a 10% rate of return on assets. (a) (b) ANS: (a) Markup Percentage = Desired Profit + Total Fixed Costs Total Variable Costs Markup Percentage = $472,500 + $50,000 $1,900,000 Markup Percentage = $522,500 $1,900,000 Compute a markup percentage based on variable cost. Determine a selling price. Markup Percentage = 27.5% (b) Cost amount per unit Markup ($19 27.5%) Selling price $19.00 5.23 $24.23 DIF: Difficult OBJ: 24(9)-02 NAT: AACSB Analytic | IMA-Decision Analysis Chapter 9 Differential Analysis and Product Pricing 3 112 14. Snazzle Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are available: Sales price per unit Variable cost per unit Contribution margin per unit Iced Tea $.90 .30 $.60 Soda $.60 .15 $.45 Lemonade $.50 .10 $.40 Snazzle is experiencing a bottleneck in one of its processes that affects each product as follows: Bottleneck process hours per unit (a) (b) Iced Tea 3 Soda 3 Lemonade 4 Using a theory of constraints (TOC) approach, rank the products in terms of profitability. What price for lemonade would equate its profitability to that of soda? ANS: (a) Contribution Margin per Unit = CM per Bottleneck Hour Bottleneck Hours per Unit Rank (1) (2) (3) (b) Contribution margin per bottleneck hour of soda = Revised Price of Variable Cost Lemonade (L) of Lemonade Bottleneck Hours per Unit of Lemonade Iced Tea: Soda: Lemonade: $.60 = $.20 = CM per Bottleneck Hour 3 $.45 = $.15 = CM per Bottleneck Hour 3 $.40 = $.10 = CM per Bottleneck Hour 4 $.15 = L - $.10 4 $.60 = L - $.10 $.60 + $.10 = L $.70 = L DIF: Difficult OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis 113 3 Chapter 9 Differential Analysis and Product Pricing 15. The Delicious Cake Factory sells chocolate cakes, birthday decorated cakes, and specialty cakes. The factory is experiencing a bottleneck and is trying to determine which cake is more profitable. Even though the company may have to limit the orders that it takes, they are concerned about customer service and satisfaction. (A) Calculate the contribution margin per hour per cake. (B) Determine which cakes the company should try to sell more of first, second, then last. Sales price Variable cost per cake Hours needed to bake, frost, and decorate Chocolate Cake $25.00 $5.00 1 hour Birthday Cake $45.00 $12.00 2.5 hours Specialty Cake $30.00 $10.00 2 hours ANS: (A) Chocolate $20, Birthday $33, Speciality $20 (B) Chocolate, Birthday, Specialty Sales price Variable cost per cake Contribution Margin per cake Hours needed to bake, frost, and decorate Contribution margin per hour Chocolate Cake $25.00 $5.00 $20.00 1 hour $20.00 Birthday Cake $45.00 $12.00 $33.00 2.5 hours $16.50 Specialty Cake $30.00 $10.00 $20.00 2 hours $10.00 DIF: Difficult OBJ: 24(9)-03 NAT: AACSB Analytic | IMA-Decision Analysis

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UC Riverside - ACC - ACC 101A
Chapter 10 Capital Investment AnalysisOBJECTIVESObj 1 Obj 2 Obj 3 Obj 4Explain the nature and importance of capital investment analysis. Evaluate capital investment proposals, using the following methods: average rate of return, cash payback, net prese
UC Riverside - ACC - ACC 101A
Chapter 11 Cost Allocation and Activity-Based CostingOBJECTIVESObj 1 Obj 2 Obj 3 Obj 4 Obj 5 Obj 6Identify three methods used for allocating factory overhead costs to products. Use a single plantwide factory overhead rate for product costing. Use multi
UC Riverside - ACC - ACC 101A
Chapter 12 Cost Management for Just-In-Time EnvironmentsOBJECTIVESObj 1 Obj 2 Obj 3 Obj 4 Obj 5Compare and contrast just-in-time (JIT) manufacturing practices with traditional manufacturing practices. Apply just-in-time manufacturing practices to a tra
UC Riverside - ACC - ACC 101A
Chapter 13 Statement of Cash FlowsOBJECTIVESObj 1 Obj 2 Obj 3Summarize the types of cash flow activities reported in the statement of cash flows. Prepare a statement of cash flows, using the indirect method. Prepare a statement of cash flows, using the
UC Riverside - ACC - ACC 101A
Chapter 14 Financial Statement AnalysisOBJECTIVESObj 1 Obj 2 Obj 3 Obj 4List basic financial statement analytical procedures. Apply financial statement analysis to assess the solvency of a business. Apply financial statement analysis to assess the prof
École Normale Supérieure - BUS - Busi307
StratSim Industry 1/Firm AAffordable Cars business strategyThe business dictionary defines a business as an economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Businesses require inv
Academy of Design Tampa - CHEM - che 435
UC Davis - CHEM 2B - 993029
UC Davis - CHEM 2B - 993029
Lecture 2 Internal Energy First Law of Thermodynamics State Functions versus Path Functions Heat Transfer during a Physical Change Heat Transfer During a Chemical Change At constant volume (qv) At constant pressure (qp) Standard State and Standard Enthal
UC Davis - CHEM 2B - 993029
Lecture 3 Using Thermochemical Equations. Hesss Law. Standard Enthalpy of Formation of a Substance. Determination of Ho : A summary. Indirect determination of Ho : A summary.TOUPADAKIS Chapter 7 Lecture 3Using Thermochemical Equations Enthalpy and the
UC Davis - CHEM 2B - 993029
Chapter 12 Why study liquids and solids?In order to answer questions like: Why is carbon dioxide normally a gas, whereas water is normally a liquid? Why do any liquids form anyway? Why do liquids freeze to solids as the temperature is lowered? Why ice fl
UC Davis - CHEM 2B - 993029
Lecture 5! ! ! ! ! ! ! ! ! Phase Diagrams and their Features. The Phase Diagrams of H2O and CO2. Types of Structures. Crystal Structure. Seven Crystal Systems or Shapes of Unit Cells. Cubic Unit Cell. Three Forms of Cubic Unit Cell. Occupancy. The Crysta
UC Davis - CHEM 2B - 993029
Chapter 13Why study solutions?In order to answer questions like: How does antifreeze work at the molecular level? How does salt work in melting ice on the roads? Why does sea water has higher boiling point than spring water? Why does a swimmers fingers
UC Davis - CHEM 2B - 993029
Lecture 7 Solution Formation as a Process Towards Equilibrium. Solubility Curves. Henrys Law: Solubility of Gases. Raoult's Law: Vapor Pressure Lowering. Fractional Distillation. Azeotropic Solutions.TOUPADAKIS Lecture 7 Chapter 13Solution Formation as
UC Davis - CHEM 2B - 993029
Lecture 8 Colligative Properties of a Solution. Solutions of Nonelectrolytes. Pure Solvent and Solution Phase Diagram. Osmotic Pressure. Osmotic Pressure in Biology. Reverse Osmosis Desalination. Solutions of Electrolytes. Vant Hoff Factor (i).TOUPADAKI
UC Davis - CHEM 2B - 993029
Lecture 9 Interionic Interactions: Debye and Hckel. Colloidal Mixtures. Summary. Problems.TOUPADAKIS Lecture 9 Chapter 13Interionic Interactions: Debye and Hckel Ions in solution do not behave independently from each other. Each ion is surrounded by o
UC Davis - CHEM 2B - 993029
Chapter 15Why study chemical equilibrium ?In order to answer questions like: How do we increase the yield of a chemical reaction in industry? Why aspirin and alcohol should not be taken together. Why and how stalagmites and stalactites form? How do we c
UC Davis - CHEM 2B - 993029
Lecture 11 Using Keq to predict the extent of a reaction.What does the size of Keq really tell us? Using Keq to calculate the extent of a reaction.Calculating equilibrium concentrations in order to find the yield of a reaction. Using Keq and Q to pre
UC Davis - CHEM 2B - 993029
Lecture 12 Le Chtelliers Principle. Factors that Alter the Composition of an Equilibrium Mixture. Concentration Pressure and Volume Temperature The No Effect of a Catalyst on the Composition of an Equilibrium Mixture.TOUPADAKIS Lecture 12 Chapter 15Wha
UC Davis - CHEM 2B - 993029
Chapter 16Why study Acids and Bases?In order to answer questions like: What makes a substance behave as an acid or as a base? How do acids and bases function in plant and animal cells for the survival of individual organisms? What are the characteristi
UC Davis - CHEM 2B - 993029
Lecture 14 Strong acids versus weak acids and strong bases versus weak bases. Percent ionization. Various ways to describe acid strength. Problems Calculating the pH of a strong acid and the pH of a weak acid solution. Calculating the pH of a strong base
UC Davis - CHEM 2B - 993029
Lecture 15Ions as Acids and Bases. The Conjugate Seesaw. Hydrolysis and the pH of Salt Solutions. Molecular Structure and Acid-Base Behavior. Lewis Acids and Bases. Complex Ions. Acid Rain.TOUPADAKIS Lecture 15 Chapter 16Ions as Acids and BasesNH4+ +
UC Davis - CHEM 2B - 993029
Lecture 16 The Common-Ion Effect in Acid-Base Equilibria. Suppression of Ionization of a Weak Acid. Suppression of Ionization of a Weak Base.TOUPADAKIS Lecture 16 Chapter 17The Common-Ion Effect in Acid-Base Equilibria The Common-Ion Effect describes t
UC Davis - CHEM 2B - 993029
Lecture 17 Buffer Solutions. Solutions of Weak Acids and Their Salts. Solutions of Weak Bases and Their Salts. How a Buffer Works. The Henderson - Hasselbalch Equation. Calculating the pH of a Buffer Solution.TOUPADAKIS Lecture 17 Chapter 17Buffer Solu
UC Davis - CHEM 2B - 993029
Lecture 18 Calculating the pH of a Buffer Solution After the Addition of a Strong Base. Buffer Capacity. Preparing a Buffer Solution. Acid-Base Indicators.TOUPADAKIS Lecture 18 Chapter 17Calculating pH Changes in Buffer SolutionsTOUPADAKIS Lecture 18
UC Davis - CHEM 2B - 993029
Lecture 19 Neutralization Reactions and Titration Curves: Terminology Titration of a Strong Acid with a Strong Base. Titration of a Strong Base with a Strong Acid. Titration of a Weak Acid with a Strong Base. Titration of a Weak Base with a Strong Acid.
UC Davis - CHEM 2B - 993029
Chapter 18Why Study Solubility and Complex-Ion Equilibria?In order to answer questions like: How does tooth enamel dissolves on acidic solutions causing tooth decay? How does fluoride in toothpaste prevent tooth decay? How does the precipitation of cer
UC Davis - CHEM 2B - 993029
Lecture 21 The Salt Effect. Salt Effect Versus Common Ion Effect. Ion Pair Formation: Incomplete Dissociation. Criteria for Precipitation: The Ion Product Qsp. Fractional Precipitation. The pH of the Solution Can Affect Solubility.TOUPADAKIS Lecture 2
UC Davis - CHEM 2B - 993029
Lecture 22Complex Ions: Definitions. Formation Constant of Complex Ions. Formation of Complex Ions Affects Solubility. Study Example 18-11. Qualitative Cation Analysis. Tooth Decay. Study Example 18-12.TOUPADAKIS Lecture 22 Chapter 18Complex Ions Comp
UC Davis - CHEM 2B - 993029
Chapter 19 Why Study Entropy and Free Energy?In order to answer questions like: Why physical and chemical changes under specified conditions tend to be favored one direction over another? What is the connection between energy and the extent of a reactio
UC Davis - CHEM 2B - 993029
Lecture 24 Determination of Stotal for a Chemical Change. Free Energy (G) and Free Energy Change (G). Criterion for Spontaneous Change based on Gsystem.TOUPADAKIS Lecture 24 Chapter 19Determination of Stotal for a Chemical ChangeStotal = Ssystem + Ssu
UC Davis - CHEM 2B - 993029
Lecture 26 Free Energy Change and Spontaneity Spontaneity of a Chemical Change at Nonstandard Conditions: G = G + RT ln Q Relationship of G to the Equilibrium Constant: G = - RT ln KeqTOUPADAKIS Lecture 26 Chapter 19Free Energy Change and Spontaneity
Baltimore Hebrew University - PHILOSOPHY - 1230uh
AN EXISTENTIAL READING OF CAMUS AND DOSTOEVSKY FOCUSING ON CAMUSS NOTION OF THE ABSURD AND SARTREAN AUTHENTICITYA Thesisby JI HYUN PARKSubmitted to the Office of Graduate Studies of Texas A&M University in partial fulfillment of the requirements for th
Wilson - MBA - mba
Supply Chain ManagementNetwork Design in the Supply Chain5-1OutlineA strategic framework for facility location x Multi-echelon networks x Gravity methods for location x Plant location modelsx5 -2Network Design DecisionsFacility role x Facility loc
Ohio State - STAT - 620
Chapter 1Probability TheoryIf any little problem comes your way, I shall be happy, if I can, to give you a hint or two as to its solution. Sherlock Holmes The Adventure of the Three Students 1.1 a. Each sample point describes the result of the toss (H o
Ohio State - STAT - 620
Chapter 2Transformations and Expectations2.1 a. fx (x) = 42x5 (1 x), 0 < x < 1; y = x3 = g (x), monotone, and Y = (0, 1). Use Theorem 2.1.5. fY (y ) = fx (g 1 (y ) = d 1 g (y ) dy = fx (y 1/3 ) d 1/3 1 (y ) = 42y 5/3 (1 y 1/3 )( y 2/3 ) dy 314y (1 y 1/
Ohio State - STAT - 622
Chapter 12Regression Models12.1 The point ( , y ) is the closest if it lies on the vertex of the right triangle with vertices (x , y ) x and (x , a + bx ). By the Pythagorean theorem, we must have (x x ) + y (a + bx ) 2 2+ (x x ) +( y ) y22= (x x )
Ohio State - STAT - 622
Chapter 11Analysis of Variance and Regression11.1 a. The rst order Taylors series approximation is Var[g (Y )] [g ()]2 VarY = [g ()]2 v (). b. If we choose g (y ) = g (y ) =y a1v (x)dx, then adg () d = d d1 v (x)dx =1 v (),by the Fundamental
Ohio State - STAT - 622
Chapter 10Asymptotic Evaluations10.1 First calculate some moments for this distribution. EX = /3, E X 2 = 1/3, VarX = 1 2 . 3 9 So 3Xn is an unbiased estimator of with variance Var(3Xn ) = 9(VarX )/n = (3 2 )/n 0 as n . So by Theorem 10.1.3, 3Xn is a c
Ohio State - STAT - 622
Chapter 9Interval Estimation9.1 Denote A = cfw_x : L(x) and B = cfw_x : U (x) . Then A B = cfw_x : L(x) U (x) and 1 P cfw_A B = P cfw_L(X ) or U (X ) P cfw_L(X ) or L(X ) = 1, since L(x) U (x). Therefore, P (A B ) = P (A)+ P (B ) P (A B ) = 1 1 +1 2 1
Ohio State - STAT - 622
Chapter 8Hypothesis Testing8.1 Let X = # of heads out of 1000. If the coin is fair, then X binomial(1000, 1/2). So1000P (X 560) =x=5601000 x1 2x1 2nx .0000825,where a computer was used to do the calculation. For this binomial, E X = 1000p = 50
Ohio State - STAT - 622
Chapter 7Point Estimation 7.1 For each value of x, the MLE is the value of that maximizes f (x|). These values are in the following table. x01 2 34 1 1 2 or 3 3 3 At x = 2, f (x|2) = f (x|3) = 1/4 are both maxima, so both = 2 or = 3 are MLEs. 7.2 a. L(
Ohio State - STAT - 622
Chapter 6Principles of Data Reduction6.1 By the Factorization Theorem, |X | is sucient because the pdf of X is f (x| 2 ) = 2 2 2 2 1 1 ex /2 = e|x| /2 = g ( |x| 2 ) 1 . 2 2h(x)6.2 By the Factorization Theorem, T (X ) = mini (Xi /i) is sucient because
Ohio State - STAT - 622
Chapter 5Properties of a Random Sample5.1 Let X = # color blind people in a sample of size n. Then X binomial(n, p), where p = .01. The probability that a sample contains a color blind person is P (X > 0) = 1 P (X = 0), where P (X = 0) = n (.01)0 (.99)n
Ohio State - STAT - 622
Chapter 4Multiple Random Variables4.1 Since the distribution is uniform, the easiest way to calculate these probabilities is as the ratio of areas, the total area being 4. a. The circle x2 + y 2 1 has area , so P (X 2 + Y 2 1) = . 4 2 b. The area below
Ohio State - STAT - 622
Chapter 3Common Families of Distributions3.1 The pmf of X is f (x) =1 N1 N0 +1 , N1x = N0 , N0 + 1, . . . , N1 . ThenN1 N0 1EX=x=N 0x1 1 = N1 N 0 +1 N1 N 0 +1xx=1 x=1x= =1 N1 N 0 +1 N1 + N0 . 2N 1N1 (N 1 +1) (N 0 1)(N 0 1 + 1) 2 2Similar
Ohio State - ESL - 104
Ohio State - STAT - 665
=P(z<=z* if H0 true)p-value = P(Y<=344 if p=1/2) = P(Y=344)+P(Y=343)+. < 0.0001p-values=cfw_1, 0.11, 0.006, 0.0002, 2.3x10^-6, 1.8x10^-8, 6.4x10^-11=P(Y=0)+P(Y=1)and close to the nominal level of 95%.
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
This datasheet has been download from: www.datasheetcatalog.com Datasheets for electronics components.
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
"카이스트, 한국과학기술원" - ARCH - Arch 101
En n n n82371FB (PIIX) AND 82371SB (PIIX3) PCI ISA IDE XCELERATORnEnhanced DMA Functions Two 8237 DMA Controllers Fast Type F DMA Compatible DMA Transfers 7 Independently Programmable Channels X-Bus Peripheral Support Chip Select Decode Controls Lower
"카이스트, 한국과학기술원" - ARCH - Arch 101
This Material Copyrighted By Its Respective ManufacturerThis Material Copyrighted By Its Respective ManufacturerThis Material Copyrighted By Its Respective ManufacturerThis Material Copyrighted By Its Respective ManufacturerThis Material Copyrighted B
"카이스트, 한국과학기술원" - ARCH - Arch 101