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practice - nature of cost(answers)

By Gail Martinez,2014-11-24 17:45
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practice - nature of cost(answers)

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     16. (a.) The product to emphasize can be determined by computing the

    contribution margin per unit of the scarce resource, which in this case is

    grinding machine time.

     Product

     J K L

     Selling price $80 $60 $90

     Variable costs 50 40 55

     Contribution margin $30 $20 $35

     Grinding machine time 10 min. 5 min. 7 min.

     Contribution margin

     per minute $3.00 $4.00 $5.00

     Product L should be emphasized because it has the greatest contribution

    margin per unit of the scarce resource.

     (b.) If additional grinding machine time would be used to produce more of

    Product L, the time would be worth 60 x $5 = $300 per hour. 雨天阳光搜集整理http:///sunny_loveu

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    17.(a.) & (b.)

     Product X Product Y

     Sales value after further processing $40,800 $54,200

     Costs of further processing 11,600 25,300

     Benefit of further processing 29,200 28,900

     Less: Sales value at split-off point 32,000 28,000

     Net advantage (disadvantage) ($ 2,800) $ 900

     (c.) & (d.)

     Minimum selling price at split-off ... $29,200 $28,900

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