Accounting: Tools for Business Decision Making

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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
Background image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 2

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online