Revenues $120,000 $120,000
Variable Costs $60,000 $60,000
Fixed Costs $35,000 $35,000
Which of the following are relevant in choosing between the alternatives?
2.) Adler Company manufactures a product with the following costs: Unit Variable Cost $50 Unit Fixed Cost $24 Total Cost Per unit $74
The company normally sells 10,000 units at a price of $88 each. Adler has a one-time opportunity to sell an additional 3,000 units at $70 each in a foreign market, which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
3.) If a company must expand capacity to accept a special order, it is likely that there will be
4.) May company produces 1,000 units of a necessary component with the following costs: Direct Materials $48,000 Direct Labor $32,000 Variable overhead $8,000 Fixed overhead $14,000
May Company could avoid $6,000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external purchase price that May Company would accept to acquire at 1,000 units externally?
5.) A company has a process that results in 500 drums of Chemical L that can be sold for $300 per drum. An alternative would be to process Chemical L further at a cost of $25,000 and then sell it for $380 per drum. Should management sell Chemical L now or should Chemical L be processed further and then sold? What is the effect of the action?
6.) The focus of a sell or process further decision
7.) A company is considering replacing old equipment with new equipment. Which of the following is a relevant cost for incremental analysis?
8.) A company has several product lines, one of which reflect the following results: