026 per mile parking in kuala lumpur 2 days 25 per

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Unformatted text preview: ile) Parking in Kuala Lumpur (2 days @ $25 per day) Total $ 46.00 29.90 11.96 50.00 $ 137.86 Relevant Financial Cost of Taking the Plane Round-trip ticket $ 104.00 Total and Differential Cost Approaches The management of a company is considering a new labor saving machine that rents for $3,000 per year. Data about the company’s annual sales and costs with and without the new machine are: Sales (5,000 units @ $40 per unit) Less variable expenses: Direct materials (5,000 units @ $14 per unit) Direct labor (5,000 units @ $8 and $5 per unit) Variable overhead (5,000 units @ $2 per unit) Total variable expenses Contribution margin Less fixed expense: Other Rent on new machine Total fixed expenses Net operating income Current Situation $ 200,000 Situation W ith New Machine $ 200,000 Differential Costs and Benefits - 70,000 40,000 10,000 120,000 80,000 70,000 25,000 10,000 105,000 95,000 15,000 15,000 62,000 62,000 18,000 62,000 3,000 65,000 30,000 (3,000) (3,000) 12,000 $ $ Total and Differential Cost Approaches Alternatively, isolate those relevant data with a differential impact Net Advantage to Renting the New Machine Decrease in direct labor costs (5,000 units @ $3 per unit) Increase in fixed rental expenses Net annual cost saving from renting the new machine $ $ 15,000 (3,000) 12,000 D_________ S______________ I_______________ O____________ Special Business Decisions Make vs. Buy (Outsource) Add vs. Drop Business Special Orders: Accept vs. Reject Joint Products: Process further vs. Sell Maximize Profits with Limited...
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