ch11 a - CH 11 11-18 (15 min.) Multiple choice. 1. (b)...

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CH 11 11-18 (15 min.) Multiple choice. 1. (b) Special order price per unit $6.00 Variable manufacturing cost per unit 4.50 Contribution margin per unit $1.50 Effect on operating income = $1.50 × 20,000 units = $30,000 increase 2. (b) Costs of purchases, 20,000 units × $60 $1,200,000 Total relevant costs of making: Variable manufacturing costs, $64 – $16 $48 Fixed costs eliminated 9 Costs saved by not making $57 Multiply by 20,000 units, so total costs saved are $57 × 20,000 1,140,000 Extra costs of purchasing outside 60,000 Minimum overall savings for Reno 25,000 Necessary relevant costs that would have to be saved in manufacturing Part No. 575 $ 85,000 11-19 (30 min.) Special order, activity-based costing. 1. Award Plus’ operating income under the alternatives of accepting/rejecting the special order are: Without One- Time Only Special Order 7,500 Units With One- Time Only Special Order 10,000 Units Difference 2,500 Units Revenues $1,125,000 $1,375,000 $250,000 Variable costs: Direct materials 262,500 350,000 1 87,500 Direct manufacturing labor 300,000 400,000 2 100,000 Batch manufacturing costs 75,000 87,500 3 12,500 Fixed costs: Fixed manufacturing costs
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This note was uploaded on 02/23/2010 for the course ACCT 42312 taught by Professor Huh during the Fall '09 term at CSU San Bernardino.

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ch11 a - CH 11 11-18 (15 min.) Multiple choice. 1. (b)...

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