Horngren‚ C.T.‚ Datar‚ S.M. and Foster‚ G. (2003) Cost Accounting - A Managerial Emphasis‚ Pearson Education‚ Inc.‚ New Jersey‚ Eleventh Edition CHAPTER 11 DECISION MAKING AND RELEVANT INFORMATION 11-1 The five steps in the decision process outlined in Exhibit 11-1 of the text are: 1. 2. 3. 4. 5. Obtain information Make predictions about future costs Choose an alternative Implement the decision Evaluate performance to provide feedback 11-2 Relevant costs are expected future costs that differ
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00 | | Sub-total cost | | Compensation cost | | $85.35 | | Total variable cost | $352.60 | 7. For each distribution strategy‚ calculate the unit contribution and contribution margin ratio for each of the two product lines (necklaces and earrings). What is the weighted average contribution margin for an order at a trade show and an order with a sales rep? For trade show distribution strategy‚ the unit contribution and contribution ratio for each of the product lines can be determined
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of laser printers per day‚ the older plant can produce 200 units per day. Variable cost per unit in Ogden is $110‚00; in Sandy variable cost is $15 higher. Selling price for the printer is $320‚00. Based on the data mentioned above the contribution margin per unit of normal production is $210‚00 in Ogden and $195‚00 in Sandy. Fixed costs per unit based on normal capacity are $70‚00 and $39‚00; total fixed cost is $4 200 000 for the Ogden plant and $1 872 000 for Sandy. In the circumstance when Ogden
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life cycles. • Many competitors and often leads to low profit margin. Innovative Products • Many companies introduce innovations in fashion or technology to give customer an additional reason to buy their offerings. • The products are fashion apparel‚ personal computers. • Achieve higher profit margins‚ unpredictable demand and short life cycles. • Innovative products require a fundamentally different supply chain than stable‚ low-margin functional. Is Your Product Functional or Innovative Functional
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Key Events/Case Synopsis National Fabricators Inc. is a company that specializes in the manufacturing of lockers‚ school furniture‚ toilet partitions‚ steel shelving‚ and is now currently owned by Tom Kruger after buying out $75‚000 of shares from shareholders in 1992. The industry is very competitive as costs are rising and prices being cut while the economy declines at the same time. As the president of National Fabricators‚ Tom Kruger needs to bring the company back on its feet in order to
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1. Summary of Massey-Ferguson’s 1971-176 Goals‚ Strategy and Risk/Return profile Goals/Strategy: • Focus on small tractors‚ combine harvesters and industrial machinery • Exploit markets outside North America and Western Europe • Dealing directly with governments and public institutions • Central production of diesel engines in UK Risk/Return profile: • Empire Building; engaging in potential negative NPV investments • Expanding potentially unprofitable divisions (ambitious program of expanding
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on the January and February 2010 Income Statements‚ Net Income for 2010 is projected to be approximately $19‚884‚ compared to a Net Loss of ($59‚787) in 2009.1 With an estimated gross profit margin of 92%2 for 2010‚ one can observe that the majority of the company’s costs are fixed. With its high profit margin ratio‚ the company has the potential to increase profitability significantly with incremental increases in revenues. The corresponding downside is that the company is at risk of
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Executive Summary Five Star Tools is a family owned manufacturing company that manufactures chisels and saws used by jewelers. They produce the tools utilizing a 3 step process. In the past two years the company has experienced significant growth and at times has not been able to meet order deadlines. Management has identified that they have a bottle neck in the coating and sharpening process. Overview The president of Five Star Tools‚ Maxfield Turner decided to meet with the vice president
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hour is $28.70/hr Question 3 - Price per unit is $400/hr internal and $800/hr external - Intracompany contribution margin: $371.30/hr - Commercial contribution margin: $771.30/hr Assume STC will fully utilize their allowable hours. The next allowable hour will be a commercial hour; therefore we consider the contribution margin to be the commercial contribution margin of $771.30/hr. Question 4 Break-even occurs when revenue equals costs so we used the following equation: Revenue
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products through big box retail outlets but instead sells directly to consumers and enterprises‚ keeping their already thin profit margin to themselves. Weaknesses of Dell: 1 commodity products. The large stream of Dell’s revenues comes from computer‚ especially laptop‚ sales‚ which is a commoditized product. Computer hardware products are sold with a very low profit margin. 2 poor customer services. Once praised‚ Dell’s customer services deteriorated due to outsourcing its call centers offshore. Dell
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