ACC202-Chapter-1-solutions

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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

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 childrens clothing, and it is doubtful that including it on a performance report for childrens clothing would be useful....
View Full Document

Ask a homework question - tutors are online