Chapter 4 Homework

# Chapter 4 Homework - Janet Mayorga Alberto Razo III...

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Janet Mayorga Alberto Razo III Managerial Accounting Chapter 4 Homework E4-21 Special Oder: High-Low Cost Estimation (a) Determine the financial implications of accepting the order. If SafeRide , Inc. were to accept the special order, they’ll be losing more money than they would gain. Opening up their business for a new market would be an opportunity, BUT it is not guaranteed that any other businesses would go to SafeRide, Inc. for the purchase of airbags. (b) How would your analysis differ if the company were operating at capacity? Determine the advantage or disadvantage of accepting the order under full-capacity circumstances. If the company is operating at full capacity, the net cost would be \$11.25-9 = 2.25*60000 = (\$135,000) disadvantage. The difference between both losses of working at full capacity versus not working at full capacity would be \$90,000. E4-22 Outsourcing (Make or Buy) Decision Hewlett-Packard makes 10,000 circuit boards/year at \$32/board. Variable costs/unit is \$24 and fixed cost are \$8/unit.

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