Sample%20Problems%20Ch.%2023%20Kimmel[1]

Accounting: Tools for Business Decision Making

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Sample Problems – Chapter 23 1. Temple, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Temple for $420 each. Temple needs 1,200 clocks annually. Temple has provided the following unit costs for its commercial clocks: Direct materials $ 100 Direct labor 120 Variable overhead 80 Fixed overhead (40% avoidable) 150 Prepare an incremental analysis which shows the effect of the make or buy decision. 2. Parrino has three product lines in its retail stores: books, videos, and music. The allocated fixed costs are based on units sold and are unavoidable. Results of the fourth quarter are presented below: Books Music Videos Total Units sold 1,000 2,000 2,000 5,000 Revenue $24,000 $48,000 $34,000 106,000 Variable departmental costs 15,000 22,000 23,000 60,000 Direct fixed costs 3,000 6,000 5,000 14,000 Allocated fixed costs 4,400 8,800 8,800 22,000 Net income (loss) $ 1,600 $11,200 ($2,800) $10,000 Demand of individual products is not affected by changes in other product lines. Prepare an incremental
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Sample%20Problems%20Ch.%2023%20Kimmel[1] - Sample Problems...

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