1

1 4,900.00 Susmain
Quantity 1,000.00
Split-off Price 24.00
Split-off Revenue 24,000.00
Processed Price 33.00
Processed Revenue 33,000.00
Incremental Revenue 9,000.00
Addtl Manu Cost 4,100.00
4,900.00

2 800.00 Susmain
Quantity 1,000.00
Split-off Price 24.00
Split-off Revenue 24,000.00
Processed Price 33.00
Processed Revenue 33,000.00
Incremental Revenue 9,000.00
Addtl Manu Cost 4,100.00
Distribution Cost 800.00
Commissions 3,300.00
800.00

3 300,000.00 Abra Henna

Quantity 2,000.00 4,000.00
Unit CM 30.00 60.00
Unit CM per Material 60,000.00 240,000.00

4 Abra Henna
2,000 Units of Abra
and 2,400 Units of Materials Used 2.00 5.00
Henna Unit CM 30.00 60.00
CM is 204,000 Unit CM per Material 15.00 12.00
Constraint Material 16,000.00
Optimal Units Produced 2,000.00
Remaining Material 12,000.00
Optimal Units Produced 2,400.00
Contribution Margin 60,000.00 144,000.00

5 Reject; Loss of 0.05 per Incremental Revenue 4.20

Box
 Reject; Loss of 0.05 per
Box Incremental Cost 4.25
Loss per Box (0.05)

6 17,850.00 Total Incremental Revenue 21,000.00

Accept Incremental Cost 21,250.00
Loss per Box (250.00)
Unemployment Insurance Savings 14,600.00
Notification Costs Savings 500.00
Rehiring and Retraining Costs Savings 3,000.00
17,850.00

7 500.00 Restore Purchase

Buy the Ford Transmission Overhaul 2,000.00
Water Pump 400.00
Master Cylinder Work 1,100.00
Selling Price (6,400.00)
Purchase Price 9,400.00
Total Cost 3,500.00 3,000.00

8 10,000.00 Foregone Rent Income (600,000.00)

Rent on Equipment (150,000.00) Qty Increase
Looney Incremental CM 500,000.00 Inc. Revenue
Incremental Tunes CM 260,000.00 Inc. VC
10,000.00 Inc. VOH

9 (17,000.00) Tiramisu
Sales 112,500.00
Cost of Goods Sold:
Prime Cost 20,000.00
VOH 15,000.00
FOH 40,500.00
Total 75,500.00
GP 37,000.00
Other Expenses:
Sales Commissions 10,000.00
Packing and Shipping 9,000.00
Advertising 15,000.00
Administrative 20,000.00
Total 54,000.00
Operating Income (Loss) (17,000.00)
10 (10,666.67) Operating Income (Loss) (17,000.00)
Financial Disadvantage Interest Income 1,333.33
(15,666.67)
Current Income (5,000.00)
Incremental Loss (10,666.67)
Total

300,000.00

Total

204,000.00
Tunes
4,000.00
400,000.00
(100,000.00)
(40,000.00)
260,000.00
 11 Grade I is Grade I Grade II
224 Unit Price 3,400.00 1,600.00
Grade II is Sales Mix 3.00 7.00
523 Let be x 7/3 x

If only for Sales incurred, 1,600,000.00 = 3,400x+

Grade I is 1,600,000.00 = 7,133.33
84 x = 224.30
Grade II is
196 Unit Sales for Current Year 224.30 523.36
Note: Units are rounded-off

12 Grade I is Grade I Grade II

167 Sales Mix 3.00 7.00
Grade II is Unit CM 714.00 272.00
389 Package Mix 2,142.00 1,904.00
Note: Units are rounded- Fixed Costs 225,000.00
off Factor 55.61
Break-even Units 166.83 389.27

13a Increase by Grade I Grade II

28,984.11 Sales Mix 3.00 7.00
13b Grade I is Unit CM 955.74 391.52
144 Package Mix 2,867.22 2,740.64
Grade II is Fixed Costs 269,000.00
336 Factor 47.97
Note: Units are rounded- Break-even Units 143.91 335.78
off
1,000,000.00 = 3,400x+
1,000,000.00 = 7,133.33
x = 140.19

Remaining Grade I 140.19

Remaining Grade II 327.10

Additional CM 72,984.11
Additional FC 44,000.00
Increase in Income 28,984.11

14a 25,364.67 Grade I Grade II

Increase Sales Mix 1.00 1.00
Unit CM 714.00 272.00
14b Grade I is Package Mix 714.00 272.00
268 Let be x x
Grade II is New Sales Revenue 1,300,000.00
380 1,300,000.00 = 3400x+
x = 260.00
Note: Units are rounded-
off Increase in CM 66,198.00
Increase in FC (40,833.33)
Increase in Net Income 25,364.67

Fixed Costs 295,000.00

Factor 299.19
Break-even Units 299.19 299.19

New Factor 184.14

New BE Units 268.25 380.40

15 25.03 DM 10.20
DL 1.63
Machine 10.00
VOH 0.75
FOH (Irrelevant) 2.00
Admin 2.45
Total Costs 25.03

16 31.18 Blankets
DM 10.20
DL 1.63
Machine 10.00
VOH 0.75
FOH 2.00
Admin 2.45
Total Costs 27.03
Mark-up 0.15
Selling Price 31.18
Costs 27.03
Gross Profit 4.16
Income Tax 1.46
Net Income 2.70

17 49,000.00 Qty 3,000.00

 Increase Price 75.00
Incremental Revenue 225,000.00
Inc. DM 105,000.00
Inc. DL 30,000.00
Inc. VOH 18,000.00
Comission 8,000.00
Other VC 15,000.00
CM 49,000.00

18 247,400.00 Fixed Costs

Year 1 650,000.00 Selling Price
Years 2-4 3,560,000.00 VC
2,225,000.00 Unit CM
Total Costs 6,435,000.00
Rights Sold 250,000.00
Cost to Recover 6,185,000.00
Break-even Units 247,400.00

19 The second one, b Selling Price 50.00 Selling Price

Financial Advantage of VC 25 VC
1,000,000.00 Unit CM 25.00 Unit CM
Qty 500,000.00 Qty
Total CM 12,500,000.00 CM
Selling Price
VC
Unit CM
Qty
CM
Total CM

20 Buy Make Buy

27,000.00 DM 218,000.00
Savings DL 70,200.00
VOH 20,800.00
FC 58,000.00
Supplier 340,000.00
367,000.00 340,000.00

21 Make Make Buy

5,000.00 DM 218,000.00
Cost DL 70,200.00
VOH 20,800.00
 FC 26,000.00
Supplier 340,000.00
335,000.00 340,000.00

22 Make Make Buy

17,000.00 DM 372,000.00
Financial Advantage DL 129,600.00
VOH 38,400.00
FC 58,000.00
Supplier 615,000.00
598,000.00 615,000.00
 600,000.00 = 3,400x+ 1,600(7/3)x
600,000.00 = 7,133.33 x
x = 84.11

1,600(7/3)x
x

Total

4,046.00

Total

5,607.86

1,600(7/3)x
x

Total CM Earned 113,439.25

x= 27.739770191
 986.00

1600x
 50
25
25

70
25
45
100,000.00
4,500,000.00
40
25
15
600,000.00
9,000,000.00
13,500,000.00
23 1 Ft to Peach Peach
1 Ft to Sour Selling Price 18.75
4 Ft to Sweet VC 13.75
6 Ft to Cool Case CM 5.00

Ft Assigned 1.00
Excess 8.00
Assign to
Total Ft Allocation 1.00

Check: 110.00

24 4 Ft to Peach Peach
1 Ft to Sour Selling Price 18.75
1 Ft to Sweet VC 13.75
6 Ft to Cool Case CM 5.00
Sale per Ft 22.00
CM per Ft 110.00

Ft Assigned 1.00
Excess 8.00
Assign to 3.00
Total Ft Allocation 4.00

Check: 440.00

25 Replace Continue
Depreciation 60,000.00
Electricity Savings
DL Savings
(60,000.00)

26 Reduction of Electricity Electricity Savings 35,000.00

Reduction of Labor Costs DL Savings 30,000.00
Dep Exp of New Equip 90,000.00
Continue with the Old Equip (25,000.00)

27 130,000.00 Electricity Savings 35,000.00

DL Savings 30,000.00
65,000.00
Useful Life 2.00
Price 130,000.00
28 3,628,800.00 P
SP 150.00
Normal 96,000.00
Qty 96,000.00
Excess -
CM per Unit 64.00
CM 6,144,000.00
CM of Overtime
Total CM 6,144,000.00
FC 4,704,000.00
29 120,000 in Pantene 1,440,000.00
72,000 in Westene
P
CM 6,144,000.00
1,464,000.00
Total CM 7,608,000.00

Since deduction to Voh is less in P, it should be maximized

30 (70,900.00) Sales 3,751,500.00

COGS 2,722,400.00
GP 1,029,100.00
Selling and Admin Exp 1,100,000.00
Operating (Loss) (70,900.00)

Let x be units
83*x/2+100*x/2 =
183 x =
x =

Manu Cost per Unit 66.40

FC per Unit 20.00
VC per Unit 46.40
Var Selling Cost per Unit 5.00
Total VC per Unit 51.40
Total VC per Unit 2,004,900.00

Selling and Admin 1,100,000.00

Var Selling and Admin 102,500.00
F Selling and Adsmin 997,500.00
Direct Fixed S&A 698,250.00
 Direct FOH 820,000.00
Total Direct FOH 1,518,250.00
Common FC 299,250.00

31 (1,175,100.00) Benefit 100,000.00

OR Incremental Cost 348,500.00
1,175,100.00 Contribution Loss 926,600.00
Decrease (1,175,100.00)

32 Process Split-off Revenue 7,200.00

Financial Advantage of Processed Revenue 24,000.00
3,342.00 Incremental Revenue 16,800.00
Processing Costs 1,500.00
Incremental Packaging 2,361.00
Incremental Shipping 9,597.00
3,342.00

33 1,476,050.00 Split-off Revenue 3,180,000.00

Increase Processed Revenue 10,600,000.00
Incremental Revenue 7,420,000.00
Processing Costs 662,500.00
Incremental Packaging 1,042,775.00
Incremental Shipping 4,238,675.00
1,476,050.00

34
Sour Sweet Cool
20.50 27.75 39.30
15.60 20.70 30.40
4.90 7.05 8.90

1.00 1.00 1.00

3.00 5.00
1.00 4.00 6.00

58.80 169.20 694.20 1,032.20

Sour Sweet Cool

20.50 27.75 39.30
15.60 20.70 30.40
4.90 7.05 8.90
12.00 6.00 13.00
58.80 42.30 115.70

1.00 1.00 1.00

5.00
1.00 1.00 6.00

58.80 42.30 694.20 1,235.30

Replace
90,000.00
35,000.00
30,000.00
(25,000.00)
W Total
150.00
76,800.00
96,000.00
(19,200.00)
48.00
3,686,400.00
768,000.00
4,454,400.00
2,265,600.00
2,188,800.00 3,628,800.00

W
3,456,000.00

3,456,000.00 11,064,000.00

Sales 3,751,500.00
Var Costs 2,004,900.00
CM 1,746,600.00
Fixed Costs 1,518,250.00
Margin 228,350.00
Common FC 299,250.00
Operating (Loss) (70,900.00)
3,751,500.00
7,503,000.00
41,000.00
Quantity
Selling Price
Sales -
Variable Costs VC Ratio #DIV/0!
Contribution Margin - Unit CM #DIV/0! CM Ratio #DIV/0!
Fixed Costs
Operating Income -
Income Tax Tax Rate #DIV/0!
Net Income -