# ch26 - CHAPTER 26 Incremental Analysis and Capital...

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26-1 CHAPTER 26 Incremental Analysis and Capital Budgeting ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises A Problems B Problems 1. Identify the steps in management’s decision-making process. 1, 2 1 1 2. Describe the concept of incremental analysis. 3, 4 2 1 3. Identify the relevant costs in accepting an order at a special price. 5 3 2, 3 1A 1B 4. Identify the relevant costs in a make-or-buy decision. 6, 7 4 4 2A 2B 5. Give the decision rule for whether to sell or process materials further. 8 5 5, 6 6. Identify the factors to consider in retaining or replacing equipment. 96 7 7. Explain the relevant factors in whether to eliminate an unprofitable segment. 10 7 8, 9 3A 3B 8. Determine which products to make and sell when resources are limited. 11 8 10 9. Contrast annual rate of return and cash payback in capital budgeting. 12, 13, 14, 15, 16 9, 10 11, 12, 13 4A, 5A 4B, 5B

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26-2 ASSIGNMENT CLASSIFICATION TABLE (Continued) Study Objectives Questions Brief Exercises Exercises A Problems B Problems 10. Distinguish between the net present value and internal rate of return methods. 17, 18, 19, 20 11, 12, 13 12, 13, 14, 15 4A, 5A, 6A 4B, 5B, 6B
26-3 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Make incremental analysis for special order, and identify nonfinancial factors in decision. Simple 20–30 2A Make incremental analysis related to make or buy; consider opportunity cost, and identify nonfinancial factors. Moderate 30–40 3A Compute contribution margin, and prepare incremental analysis concerning elimination of divisions. Moderate 30–40 4A Compute annual rate of return, cash payback, and net present value. Moderate 30–40 5A Compute annual rate of return, cash payback, and net present value. Complex 30–40 6A Compute net present value and internal rate of return. Moderate 20–30 1B Make incremental analysis for special order, and identify nonfinancial factors in decision. Simple 20–30 2B Make incremental analysis related to make or buy; consider opportunity cost, and identify nonfinancial factors. Moderate 30–40 3B Compute contribution margin, and prepare incremental analysis concerning elimination of divisions. Moderate 30–40 4B Compute annual rate of return, cash payback, and net present value. Moderate 30–40 5B Compute annual rate of return, cash payback, and net Present value. Complex 30–40 6B Compute net present value and internal rate of return. Moderate 20–30

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BLOOM’S TAXONOMY TABLE 26-4 Correlation Chart between Bloom’s Taxonomy, Study Objectives and End-of-Chapter Exercises and Problems Study Objective Knowledge Comprehension Application Analysis Synthesis Evaluation 1. Identify the steps in management’s decision-making process. BE26-1 Q26-1 Q26-2 E26-1 2. Describe the concept of incremental analysis. Q26-3 Q26-4 BE26-2 3. Identify the relevant costs in accepting an order at a special price. Q26-5 BE26-3 E26-2 E26-3 P26-1A P26-1B 4. Identify the relevant costs in a make- or-buy decision. Q26-6 Q26-7 BE26-4 E26-4 P26-2A P26-2B 5. Give the decision rule for whether to sell or process materials further.
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ch26 - CHAPTER 26 Incremental Analysis and Capital...

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