Chapter 11 Cost HW - Saikat Mitra Chapter 11 HW Cost...

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Chapter 11 HW Cost Accounting 11-18 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 costs of Production: Variable manufacturing costs= $64 – $16= $48 Fixed costs eliminated 9 Costs saved by not making $57 So, total costs saved = $57 *20,000 = $ 1,140,000 Extra costs of purchasing outside 60,000 Minimum overall savings for Reno 25,000 Relevant costs that would have to be saved $ 85,000 11-23 Only Model 14 should be produced. The key to this problem is the relationship of manufacturing overhead to each product. It takes twice as long to produce Model 9. Management should choose the product mix that maximizes operating income for a given production capacity. Model 9 Model 14 Selling price Variable costs per unit (total cost – FMOH) Contribution margin per unit Relative use of machine hours per unit of product
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Chapter 11 Cost HW - Saikat Mitra Chapter 11 HW Cost...

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