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Unformatted text preview: purchase. But the new one is the new one, therefore it seems better to buy new one for the difference of $15. Moreover, the new piece will be covered under repair warranty; therefore, it will be worthy to pay additional dollars to cover the repair warranty. 22. a. MP3 Players PDAs Contribution margin $ Divide by labor time per unit CM per unit of labor time $ b. 27. a. Only the variable production costs are relevant to this decision: The costs that are relevant to accept the special order is: Direct materials 520 Direct labor 40 Variable overhead 50 Total 610 b. Incremental revenue: $ x 200 620*200=124,000 Incremental costs: $ x 200 610*200=122,000 Incremental profit $2,000 $ So the profit would increase by $2000 if this special order was accepted....
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- Spring '11