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Exam 9: Differential Analysis, Product Pricing, and Activity-Based Costing

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Question 91

True/False

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Differential analysis can aid management in making decisions on a variety of alternatives, including whether to discontinue an unprofitable segment and whether to replace usable plant assets.

A) True
B) False

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Question 92

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What is the contribution margin per machine hour for Bales?

A) $5
B) $7
C) $35
D) $28

E) C) and D)
F) None of the above

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Question 93

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Ptarmigan Company produces two products.Product A has a contribution margin of $20 and requires 4 machine hours.Product B has a contribution margin of $18 and requires 3 machine hours.Determine the most profitable product assuming the machine hours are the constraint.

An employee of Morgan Corporation has found some partially completed units of Model X in a dusty corner of the warehouse.A job ticket attached to the units indicates that a total of $750 in manufacturing costs have been used to bring the materials to this point in the manufacturing process.The units can be sold in their current condition for $275 to a scrap metal dealer.If Morgan spends $250 to complete the units, they could be sold for $600. a What should Morgan do? Why? b Identify the sunk cost, if any.

Using the variable cost concept, determine the selling price for 30,000 units using the following data:

The unit selling price for the company's product is

The Sierra Company produces its product at a total cost of $89 per unit.Of this amount, $14 per unit is selling and administrative costs.The total variable cost is $58 per unit and the desired profit is $28 per unit. Determine the markup percentage using the a total cost, b product cost, and c variable cost concept.

Match each of the definitions that follow with the term a-e it defines. -Variable manufacturing costs plus variable selling and administrative costs are included in cost per unit

When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based upon normal levels of performance.

Which product has the highest contribution margin per machine hour?

Delaney Company is considering replacing equipment which originally cost $600,000 and which has $420,000 accumulated depreciation to date.A new machine will cost $790,000 and the old equipment can be sold for $8,000.What is the sunk cost in this situation?

Determine the markup percentage on product cost.

The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is

The differential revenue of producing Product P is $22 per pound.

All of the following should be considered in a make-or-buy decision except