ACC202-Chapter-1-solutions - b Depreciation of the building...

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Chapter 1 Managerial Accounting in the Information Age Solutions E11. Anne should not consider how much she paid for the old machine because that is a sunk cost. She should consider the value of the old machine in the used photocopier market—an incremental cash inflow equal to the market value of the old machine will result if she buys a new photocopy machine. E13. If Gordon visits his friend, he will incur a $400 ($16 hours × $25) opportunity cost. E15. a. When a second shift is added, material costs, worker salary, and benefits are likely to increase.
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Unformatted text preview: b. Depreciation of the building will not increase when a second shift is added. P4. a. Sales increased by 12.5% ($450,000 ÷ $400,000), while cost of merchandise increased by 35% and salaries increased by only 10%. Thus, the investigation should focus on cost of merchandise since a 35% increase is disproportionate to the increase in sales. b. Electricity would not be a controllable cost for the manager of children’s clothing, and it is doubtful that including it on a performance report for children’s clothing would be useful....
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This document was uploaded on 06/11/2009.

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