Group 6

Group 6
Angelica Abriol
Eugene Aquilino
Joshell Cabral
Alyssa Tolcidas
Differential Analysis Exercises 12-1, 12-2, 12-3, 12-4, 12-5, 12-6 and 12-7
Ricardo R. Palo
Case 1 Case 2
Item
Relevant Not relevant Relevant Not relevant
a. Sales revenue X X
b. direct materials X X
c. direct labor X X
d. variable manufacturing overhead X X
e. book value - Model A3000 Machine X X
f. disposal value - model A3000 machine X X
g. depreciation - Model A300 Machine X X
h. market value - model B3800 (cost) X X
i. fixed manufacturing overhead (general) X X
j. variable selling expense X X
k. fixed selling expense X X
l. general administrative overhead X X
Ricardo R. Palo
Contribution margin lost of the program is dropped $ (80,000.00)
Fixed costs that can be avoided:
Liability Insurance $ 15,000.00
Program administrators' salaries $ 37,000.00 $ 52,000.00
Effect on net operating income for the organization as a whole $ (28,000.00)
As shown in the computations above, the effect on net operating income for Jackson County Senior Services is negative ($28,0
their housekeeping program should not be discontinued, rather, it should be retained as it actually generates a positive segme
Recasted Data: Total Home Nursing

Revenues $ 900,000.00 $ 260,000.00
Variable Expenses $ 490,000.00 $ 12,000.00
Contribution Margin $ 410,000.00 $ 140,000.00
Traceable Fixed Expenses:
Depreciation $ 68,000.00 $ 8,000.00
Liability Insurance $ 42,000.00 $ 20,000.00
Program Administrators' Salaries $ 115,000.00 $ 40,000.00
Total Traceable Fixed Expenses $ 225,000.00 $ 68,000.00
Program Segment Margins $ 185,000.00 $ 72,000.00
General Administrative Overhead $ 180,000.00
Net Operating Income (Loss) $ (5,000.00)
Senior Services is negative ($28,000). Therefore,
ctually generates a positive segment margin.
Meals on Wheels Housekeeping

$ 400,000.00 $ 240,000.00
$ 210,000.00 $ 160,000.00
$ 190,000.00 $ 80,000.00
$ 40,000.00 $ 20,000.00
$ 7,000.00 $ 15,000.00
$ 38,000.00 $ 37,000.00
$ 85,000.00 $ 72,000.00
$ 105,000.00 $ 8,000.00
Ricardo R. Palo
Make Buy
Cost of purchasing $ 300,000.00
Direct materials $ 90,000.00
Direct labor $ 120,000.00
Variable manufacturing overhead $ 15,000.00
Fixed manufacturing overhead, traceable $ 30,000.00
Fixed manufacturing overhead, common $ - $ -
Total costs $ 255,000.00 $ 300,000.00
Given the computations above, the total costs for making is $255,000 versus
that of buying ($300,000), which yields a difference of $45,000. Therefore,
Climate-Control should reject the outside supplier's offer and stick to
manufacturing all of its own component parts.
Make Buy
Cost of purchasing $ 300,000.00
Cost of making $ 255,000.00
Opportunity cost - segment margin foregone
on a potential new product line $ 65,000.00
Total costs $ 320,000.00 $ 300,000.00
Given the computations above, the total costs for making is $320,000 versus
that of purchasing ($300,000), which yields a difference of $20,000.
Therefore, Climate-Control should accept the outside supplier's offer to buy
thermostats for $20 each instead of manufacturing its own.
Ricardo R. Palo
Direct Material 149.00
Direct Labor 86.00
Variable Manufacturing OH 7.00
Relevant Costs 242.00
No. of Bracelets 10.00
Total Relevnat Costs 2,420.00
Add: Additional Special Tool 465.00
Total Costs 2,885.00
Revenue from Special Order 3,499.50

Less: Total Costs 2,885.00
Increase in NI 614.50
Decision: Accept special order

Ricardo R. Palo
1) Ski Vault Golf CaddyFishing Quiver
Selling Price 220 300 175
Variable Cost 60 120 55
Contribution Margin 160 180 120
Time Required (min) 4 5 2
Contribution Margin per min 40 36 60
Fishing Quiver - most profitable

Golf Caddy - least profitable
2) Ski Vault Golf CaddyFishing Quiver

Selling Price 220 300 175
Variable Cost 60 120 55
Contribution Margin 160 180 120
Plastic Pellets Required (lb) 5 6 5
Contribution Margin per lb 32 30 24
Ski Vault - most profitable

Fishing Quiver - least profitable
3)
However, when the constraint in time was presented, it preseted
to be the least profitable and with the pellets constraint present, it
falls in the middle.
Ricardo R. Palo
Leather Library Chairs
Selling price per unit $ 1,800.00
Variable cost per unit $ 1,200.00
Contribution margin per unit $ 600.00
Upholstery shop time required to
produce one unit $ 12.00
Contribution margin per hour $ 50.00
The company should be willing to pay a maximum of $50 per hour.
Chippendale Fabric Armchair

Selling price per unit $ 1,400.00
Variable cost per unit $ 1,000.00
Contribution margin per unit $ 400.00
Upholstery shop time required to
produce one unit $ 5.00
Contribution margin per hour $ 80.00
The company should accept the offer as it's lower than their
contribution margin of $80.
Ricardo R. Palo
Product X Product Y Product Z
Sales Value After further Processing 80,000.00 150,000.00 75,000.00
Less: Additional Processing Costs 35,000.00 40,000.00 12,000.00
Gross Profit 45,000.00 110,000.00 63,000.00
Less: Sales Value at Split Off 50,000.00 90,000.00 60,000.00
Change in Profit (5,000.00) 20,000.00 3,000.00
Product X should be sold at split off point as there would be a decrease in profit once
processed further. Products Y and Z should be processed further.

Group 6 - S16 Manacc 14th Differential Analysis Exercises and Problems - 1673269246

Uploaded by

Copyright:

Available Formats

Group 6 - S16 Manacc 14th Differential Analysis Exercises and Problems - 1673269246

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Group 6 - S16 Manacc 14th Differential Analysis Exercises and Problems - 1673269246

Uploaded by

Copyright:

Available Formats

Recasted Data: Total Home Nursing

Meals on Wheels Housekeeping

Revenue from Special Order 3,499.50

Decision: Accept special order

Fishing Quiver - most profitable

2) Ski Vault Golf CaddyFishing Quiver

Ski Vault - most profitable

The company should be willing to pay a maximum of $50 per hour.

Chippendale Fabric Armchair

You might also like