{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

fall 06 solution

fall 06 solution - ACCOUNTANCY 321 Fall 2006 EXAM II...

This preview shows pages 1–3. Sign up to view the full content.

ACCOUNTANCY 321 Fall, 2006 EXAM II Solution I. A. \$3,832,500/2,555,000 = \$1.50 fixed cost per meal B. \$3,832,500/2,190,000 = \$1.75 fixed cost per meal 3.80 variable cost per meal \$5.55 per meal C. I would expect the other seven hospitals to be concerned that the price per meal had increased. In addition, they would probably be concerned that quality of the meals might further decline. More of them may seek to purchase their meals from outside suppliers. D. The problem with the new price is caused by Omar-Chef having excess (or unused) capacity and the associated excess fixed costs. A death spiral can be a result, but not the cause. E. \$3,832,500/3,650,000 = \$1.05 fixed cost per meal at practical capacity Excess capacity cost = (\$1.05) (3,650,000 - 2,555,000) = \$1,149,750 F. The cost of unused capacity will increase as less meals are prepared and delivered to the remaining seven hospitals. Specifically: Excess capacity cost = (\$1.05) (3,650,000 - 2,190,000) = \$1,533,000

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
II. A. The consigned goods are owned by the firm who has displayed them in the Bolie
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 6

fall 06 solution - ACCOUNTANCY 321 Fall 2006 EXAM II...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online