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Ch 02 InClass_and_HWSolutions

Ch 02 InClass_and_HWSolutions - CHAPTER 2 IN CLASS...

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CHAPTER 2 IN CLASS DISCUSSION, EXTRAS & HOMEWORK EXERCISE SOLUTIONS 2–1 a. Allocation b. Direct tracing c. Allocation d. Direct tracing e. Driver tracing; potential driver— machine hours f. Direct tracing g. Driver tracing; potential driver— number of square feet occupied h. Direct tracing i. Driver tracing; potential driver— number of orders j. Direct tracing k. Allocation l. Driver tracing; potential driver— number of employees m. Direct tracing n. Allocation 15
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2–2 a. Value-chain. The price needs to cover all product costs, including the costs of developing, selling, and servicing. b. Manufacturing. This approach is mandated for external reporting. c. Value-chain. Product mix decisions should consider all costs, and the mix that is the most profitable in the long run should be selected. d. Operating. The designs should be driven by the effect they have on produc- tion, marketing, and servicing costs. Thus, the operating cost definition is the most relevant. e. Manufacturing. This approach is mandated for external reporting. f. Operating. Research and design costs are not relevant for a price decision involving an existing product. Production, marketing, and servicing costs are relevant, however. g. Operating. Any special order should cover its costs, which potentially in- clude production, marketing, and servicing costs. h. Value-chain. This is a strategic decision and involves activities and costs throughout the entire value chain.
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