# HW1 - Chapter 1 E8. a. b. c. d. variable fixed variable...

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Chapter 1 E8. a. variable b. fixed c. variable d. fixed E9. a. variable b. variable c. fixed d. fixed e. variable E11. Anne should not consider how much she paid for the old machine because that is a sunk cost. She should consider the value of the old machine in the used photocopier market—an incremental cash inflow equal to the market value of the old machine will result if she buys a new photocopy machine. E12. Incremental revenue per day \$2,000 Less incremental costs: Labor 600 Parts 400 Transportation 40 Office staff 100 Net \$ 860 Opportunity cost = \$860 per day × 52 = \$44,720 Rent and depreciation do not enter into the calculation of the opportunity cost since these costs are not incremental (they will be incurred whether or not Ken decides to stay open on Saturday). E13. If Gordon visits his friend, he will incur a \$400 (\$16 hours × \$25) opportunity cost. E15. a. When a second shift is added, material costs, worker salary, and benefits are likely to increase. b. Depreciation of the building will not increase when a second shift is added.

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P1. a. Marie’s Pie Company Production Costs Budget May, 2006 Production 16,000 Pies Ingredient cost \$20,000 Labor cost 24,000 Rent 5,000 Depreciation 6,000 Other 1,000 Total \$56,000 b. With a wage rate of \$20, 1,200 hours (\$24,000 ÷ \$20) will be needed in May. In April, only \$1,125 hours were needed (\$22,500 ÷
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## This homework help was uploaded on 04/09/2008 for the course ACG 2071 taught by Professor Sumbiznatch during the Summer '06 term at University of Florida.

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HW1 - Chapter 1 E8. a. b. c. d. variable fixed variable...

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