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    4358945

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    The document contains multiple questions regarding differential analysis for various companies. Question 139 determines the differential income per cake is $7 if Rachel Cake Factory sells 100 cakes at $19 each compared to its normal price of $22 per cake. Question 144 analyzes whether Carillion Company should lease or sell unused equipment, concluding it should lease as that option provides $7,200 more income.

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    4358945

    Uploaded by

    mohitgaba19
    165 views5 pages
    The document contains multiple questions regarding differential analysis for various companies. Question 139 determines the differential income per cake is $7 if Rachel Cake Factory sells 100 cakes at $19 each compared to its normal price of $22 per cake. Question 144 analyzes whether Carillion Company should lease or sell unused equipment, concluding it should lease as that option provides $7,200 more income.

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    The document contains multiple questions regarding differential analysis for various companies. Question 139 determines the differential income per cake is $7 if Rachel Cake Factory sells 100 cakes at $19 each compared to its normal price of $22 per cake. Question 144 analyzes whether Carillion Company should lease or sell unused equipment, concluding it should lease as that option provides $7,200 more income.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    165 views5 pages

    4358945

    Uploaded by

    mohitgaba19
    The document contains multiple questions regarding differential analysis for various companies. Question 139 determines the differential income per cake is $7 if Rachel Cake Factory sells 100 cakes at $19 each compared to its normal price of $22 per cake. Question 144 analyzes whether Carillion Company should lease or sell unused equipment, concluding it should lease as that option provides $7,200 more income.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
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    139. Rachel Cake Factory normally sells their specialty cake for $22.

    An offer to buy 100 cakes for $19 per cake was


    made by an organization hosting a national event in the city. The variable cost per cake is $11. A special decoration per
    cake will add another $1 to the cost. Determine the differential income or loss per cake from selling the cakes. 

    140. The Owl Company produces their product at a total cost of $60 per unit. Of this amount $14 per unit is selling and
    administrative costs. The total variable cost is $38 per unit The desired profit is $30 per unit. Determine the mark up
    percentage on total cost. 
    141. The Plover Company produces their product at a total cost of $60 per unit. Of this amount $14 per unit is selling
    and administrative costs. The total variable cost is $38 per unit The desired profit is $30 per unit. Determine the mark
    up percentage on product cost. 
    142. The Turtle Company produces their product at a total cost of $50 per unit. Of this amount $14 per unit is selling
    and administrative costs. The total variable cost is $38 per unit The desired profit is $20 per unit. Determine the mark
    up percentage on variable cost. 
    143. 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. 

    144. Carillion Company is considering the disposal of equipment that is no longer needed for operations. The
    equipment originally cost $600,000 and accumulated depreciation to date totals $460,000. An offer has been received to
    lease the machine for its remaining useful life for a total of $290,000, after which the equipment will have no salvage
    value. The repair, insurance, and property tax expenses during the period of the lease are estimated at $75,800.
    Alternatively, the equipment can be sold through a broker for $230,000 less a 10% commission.

    Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or
    sold. 
    Answer 139
    Present situation Proposed situation
    Selling price $ 22 $ 19
    less: variable cost $ 11 $ 11
    less: special decoration cost $ - $ 1
    Differential income per cake $ 11 $ 7

    Answer 140
    Markup percentage on total cost = Profit/Total Cost * 100
    Markup percentage on total cost = $ 30/$ 60 * 100 = 50 %

    Answer 141
    Product cost = Total variable cost less selling and administrative cost
    Product cost = $ 38 less $ 14 = $ 24

    Markup percentage on total cost = Profit/Product Cost * 100


    Markup percentage on total cost = $ 30/$ 24 * 100 = 125 %

    Answer 142
    Markup percentage on total cost = Profit/Variable Cost * 100
    Markup percentage on total cost = $ 30/$ 38 * 100 = 78.95 %
    Answer 143
    Product A is the most profitable as it provides more contribution margin per machine hour than Product B.
    Product A Product B
    Contribution margin $ 20 $ 18
    divide by machine hours per unit 4 3
    Contribution margin per machine hour $ 5 $ 6

    Answer 14
    Equipment should be leased as it provides additional income of $ 7,200
    Lease option Sale option
    Lease rentals $ 290,000 $ 230,000
    less: related expenses $ 75,800 $ 23,000
    (10 % of $ 230,000)
    Net Benefits $ 214,200 $ 207,000
    600000

    460000
    140000

    Differential Income/(loss) 290000 207000


    $ -3 75800
    $ - 214200
    $ 1
    $ -4
    ur than Product B.

    Difference
    $ 60,000
    $ 52,800

    $ 7,200

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