JJ07 - Chapter 7 The Use of Cost Information in Management...

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Chapter 7 The Use of Cost Information in Management Decision Making E4. LO 1 In this solution, supplies and travel are assumed to vary with revenue. Supplies as a percent of revenue $15,000 ÷ $201,000 0.0746 Travel as a percent of revenue $2,000 ÷ $201,000 0.0100 Increase in revenue $36,000 Less: Cost of exhibit space 12,000 Increase in supplies (.0746 × $36,000) 2,686 Increase in travel (.0100 × $36,000) 360 Increase in profit $20,954 The company should exhibit at the show since the impact on profit is positive. E5. LO 1 Cost of RBG $30,000 Less cost savings: Mailing $16,000 Printing 4,500 Salary of Pat Fisher 1,500 22,000 Incremental cost of RBG $ 8,000 The incremental cost is less than $10,000, so Craig will accept the RBG offer.
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Jiambalvo Managerial Accounting E6. LO 1, 2, 4 a. The incremental profit is $410 as follows: Revenue $65 × 150 $ 9,750 Less cost of unprepared food and beverage $42 × 150 6,300 3,450 Lost revenue $50 × 160 (8,000) Cost savings for food and beverage $31 × 160
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JJ07 - Chapter 7 The Use of Cost Information in Management...

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