3310solmod06 - $70X = $210,000 $210,000 X = $70 X = 3,000...

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Module 6 Answers 3-5. Costs that are “fixed in the short run” are usually not fixed in the long run. In fact few, if any, costs are fixed over a very long time horizon. 3-6. A sunk cost has taken place in the past and cannot be changed. A differential cost is one that will change with a given decision. 3-32. (20 min.) Basic Decision Analysis Using CVP: Anu’s Amusement Center a. $255,000 ÷ 30,000 tickets = $8.50 per ticket b. $135,000 ÷ 30,000 tickets = $4.50 per ticket c. ($8.50 – $4.50) = $4.00 per ticket d. π = ($8.50 – $4.50)X – $80,000 Let π = 0 0 = ($8.50 – $4.50)X – $80,000 $80,000 X = $4.00 X = 20,000 tickets e. Let π = $75,000 $75,000 = ($8.50 – $4.50)X – $80,000 $80,000 + $75,000 X = $4.00 X = 38,750 tickets
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3-34. (25 min.) CVP Analysis—Planning and Decision Making: T-Tunes a. π = (P – V)X – F $0 = ($150 – $80)X – $210,000
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Unformatted text preview: $70X = $210,000 $210,000 X = $70 X = 3,000 units b. π = (P – V)X – F $140,000 = ($150 – $80)X – $210,000 $70X = $350,000 $350,000 X = $70 X = 5,000 units 3-35. (30 min.) CVP analysis—Planning and Decision making: T-Tunes a. π = ($150 – $80) × 6,500 – $210,000 = $245,000 . b. 10% price decrease. Now P = $135 π = ($135 – $80)6,500 – $210,000 = $147,500 . π decreases by $97,500 20% price increase. Now P = $180 π = ($180 – $80)6,500 – $210,000 = $440,000 . π increases by $195,000 c. 10% variable cost decrease. Now V = $72 π = ($150 – $72)6,500 – $210,000 = $297,000 . π increases by $52,000 20% variable cost increase. Now V = $96 π = ($150 – $96)6,500 – $210,000 = $141,000 . π decreases by $104,000 d. π = ($150 – $88)6,500 – $189,000 = $214,000 . π decreases by $31,000...
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