Data Formulas Review View Help Page Layout General 12 ilili Wrap Text Merge & Center A- MI M $ - % 38-28 Conditional Format as Cell Formatting Table Styles Number Alignment Font Styles A D F Cuestioa 5-Relevant costs for Decision Making /21 marles total) READ CAREFULLY*** THIS QUESTION HAS DISTINCT AND UNRELATED PARTS: PARTA), PART B AND PARTC. THESE PARTS SHOULD BE ANSWERED INDEPENDENTLY AND SEPARATE FILOM PART A6 marks total) Some information about Banner Company's sales and activity are given below: Per unit sales and costs Selling price per unit $ 41.60 $ s Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead per unit 5 Variable Selling expenses Fored selling expenses per unit SUS 13.00 5.85 2.99 6.50 1.56 4.55 s $ 3 Other information Total plant capacity of tires 1 Current sales units of tires) 2. Pued manufacturing overhead Paed selling expenses 4 1 ABC Costing $ $ 117,000 78,000 507.000 354,900 #2 Variable costing * Budgeting 4 Segment Reporting 5 Relevant Costing P Type here to search 1 lipboard Font Alignment S1 X A B D Required for Part A) Relevant Costs (6 marks) Banner company has capacity to produce 117,000 tires without an increase in fixed manufacturing costs. However, their current sales are only 78,000 tires. The marketing manager projects that they can increase sales by 30% if they increase their fixed selling expenses by $104,000. (2 Increase in sales Increase in fixed selling expenses Area to show your work 3096 104,000 $ Increase (decrease) in Operating Income 0 Banner Company has 1,300 tires on-hand that cannot be sold through their regular channels due to some deformities. However, there are customers who are interested in buying these tires at a lower price. What is the minimum price Banner company should charge for the intes Unit product cost for minimum selling price: #5 Relevant Costing Briefly explain: 3 Budgeting 4 Segment Reporting 1 ABG costing #2 Vanable costing TILL Page Layout HOITUS Dalis Review View Help Calibri 12 ' . 23 Wrap Text General Pante B T U- HE Merge & Center S. %98-98 Condit Formatt lipboard Font Alignment Number 51 X B D E F Increase (decrease) in Operating Income m) Banner Company has 1,300 tires on-hand that cannot be sold through their regular channels due to some deformities. However, there are customers who are interested in buying these tires at a lower price. What is the minimum price Banner Company should charge for these irregular Unit product cost for minimum selling price: Briefly explain: Required for Part B) Add or Drop (5 marks] Use the information below regarding three products that are produced by Alpha Inc. to respond to the manager's questions. Note Tables 975,000 $ Chairs 650,000 $ Couches 1,300,000 S 520,000 Sales Sosts: Direct materials Direct labour Material handling Depreciation 390,000 97,500 58,500 65.000 286,000 78,000 52,000 62.400 104,000 78,000 93,600 Note a Note 5 B plexi General Menge a Center - pboard $ - % 9 Font Alignment Conditional form Formatting Table Styles 51 Number A A B D E Required for Part B] Add or Drop" (5 marks) Use the information below regarding three products that are produced by Alpha Inc. to respond to the manager's questions. Tables Chairs Couches Note Sales $ 975,000 $ 650,000 $ 1,300,000 Costs: Direct materials 390,000 286,000 520,000 Direct labour 97,500 78,000 104,000 Material handling 58,500 52,000 78,000 Noted Depreciation 65,000 62,400 93,600 Noteb Selling & marketing 97,500 78,000 156,000 Notec General administration 195,000 130,000 260,000 Noted Total costs 903,500 686,400 1,211,600 Operating income $ 71,500 $ (36,400) S 88,400 Vote : Vote b Vote c. Voted: Material handling is a variable cost and increases or decreases based on number of units produced. Depreciation is calculated on a straight-line basis. 50% of the selling and marketing is variable sales commissions. The remaining 50% is allocated to each product line. $227,500 of the general administration expenses include the supervisor's salary. The manager's salary can be traced to each product auf $ 78,000 Tables 65,000 Chairs 84,500 Couches 227,500 Total supervisor salary uno HI ABG costing +2 Variable costing # Budgeting #4 Segment Reporting a5 Relevant Costing Toe here to search All ME Merge Center $ -% ! Cond Forma Font Alignment 15 Number fo B D A 775 E F 76 ) The Chales product line looks unprofitable. Should it be dropped? Instead of supervising the Chairs product line, the supervisor would be moved to 77 head office to replace an accounting clerk who was paid $52,000 per year. The supervisor would still be responsible for the remaining divisions. 78 Assume that the plant space would remain idle. (2 marks) 79 Area to show your work: 80 81 82 83 84 85 86 87 88 89 90 91 92 Net advantage (disadvantage) of dropping the Chairs product line 93 94 Should the Chairs product line be dropped (yeso)? 95 96 ) Instead of having idle plant space, ime the space that was used the Chairs product line could now be used by the Couches product line 27 This increased production of couches would increase the sales of the Couches product line by $390,000. Should the Chairs product line bedropped 98 and the capacity be used to produse couches 13 marks) 41 ABS Costing 2 Variable costing 5 Budgeting 4 Segment Reporting #5 Relevant Costing HE Merge Center - $ - % Cond Toim Clipboard 6 Font Alignment Number GS1 X A G D F 6. Instead of having idle plant space, assume the space that was used by the Chairs product line could now be used by the Couches product line. This increased production of couches would increase the sales of the Couches product line by $990,000. Should the Chairs product line be dropped Band the capacity be used to produce Couches? (3 marks) Hint: Start with the net advantage (disadvantage) calculated in i) above. 1 Area to show your work Net advantage (disadvantage) of dropping the Chairs product line should the Chairs product line be dropped (yeso)? Required for Part Make or Buy" (10 marks) Regal Company makes 26,000 units of Part M20 that it later uses to produce a good that it manufactures, The unit product cost of Part M20 follow ABG costing 2 Variable costing HB Budgeting 24 Segment Reporting #5 Relevant Costing Alignment Format 51 Number X A B C D E Required for Part) "Make or Buy" (10 marks) Regal Company makes 26,000 units of Part M20 that it later uses to produce a good that it manufactures. The unit product cost of Part M20 follows Direct Materials Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead Total unit cost of Part M20 32.11 21.19 2.99 17.42 73.71 0 The total product cost 15 $73.71. Identify the relevant costs in making the decision whether to make or buy Part M20. (4 maris) Direct Materials Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead Relevant costs to make 6 calculate the net advantage (disadvantage of buying Part M20 rather than making it. (3 marks) 67.34 per unit Alternatively. Regal Company can buy Part M20 from a suppliers #5 Relevant Costing #ABC Costing #2 Variable costing #3 Budgeting #4 Segment Reporting TE o Type here to search Calibri 12 - ID > General Paste U I a A E Wrap Text Merge & Center IMI $ - % 88-98 Condit Formatt Clipboard Font Alignment Number G51 A 143 B D E 137 ) Calculate the net advantage (disadvantage) of buying Part M20 rather than making it. (3 marks) 138 139 Alternatively, Regal Company can buy Part M20 from a supplier $ 67.34 per unit 140 141 f Regal Company buys Part M20 from a supplier, they will use the machinery that was previously used to make Part M20 to make additional units 142 of a product they can sell. These additional units would generate an additional contribution margin per year of $57,200. 144 If they buy the part. $6.63 of the fixed manufacturing overhead is allocated to Part M20 and would be re-allocated to the remaining products if 145 the part is purchased from a supplier. 146 147 Area to show your work Make Buy 148 149 150 151 152 153 154 155 Total costs 156 157 Net Advantage (Disadvantage) of Purchasing 158 159 What is the maximum price Regal Company should pay a supplier if they need 20,000 units per year. (3 marks) 160 Area to show your work #3 Budgeting 25 Relevant Costing #2 Variable costing - Segment Reporting ABC Costing Clipboard 19 Font Fy Alignment 21 Number G51 fo B G D E F 151 152 153 154 155 Total costs 156 157 Net Advantage (Disadvantage) of Purchasing 158 159 m) What is the maximum price Regal Company should pay a supplier if they need 20,000 units per year. (3 marks) 160 Area to show your work 161 162 163 164 66 Maximum acceptable purchase price per unit 167 168 169 70 171 172 123 Merge Center - $ - % - Condit Format Tipboard 5 Font Alignment Number 32 > A B D E F APREAD CAREFULLY THIS QUESTION HAS 3 DISTINCT AND UNRELATED PARTS: PART A), PART B) AND PARTC. THESE PARTS SHOULD BE ANSWERED INDEPENDENTL PARTA (6 marks total) Some information about Banner Company's sales and activity are given below: Per unit sales and costs Selling price per unit S 41.60 Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead per unit Variable Selling expenses Fixed selling expenses per unit s $ S $ $ S 13.00 5.85 2.99 6.50 1.56 4.55 Other information Total plant capacity (# of tires) Current Sales units of tires) Fixed manufacturing overhead Fixed selling expenses 117.000 78,000 507,000 354,900 S S Required for Part Ali Relevant costs 6 marks ABd Costing 2 Variable costing #5 Relevant Costing #4 Segment Reporting 8 Budgeting TERChoose Paste D 5 Required for Part A "Relevant Costs (6 marks) 6) Banner company has capacity to produce 117,000 tires without an increase in fixed manufacturing costs. However, their current sales are only 7 78,000 tires. The marketing manager projects that they can increase sales by 30% if they increase their fixed selling expenses by $104,000.12 3 Increase in sales 30% Increase in fixed selling expenses $ 104,000 Area to show your work Increase (decrease) in Operating Income formities. However there are IP ub Paste Calibri 12 ' ' a-A- Accounting Wrap Text Merge Center B 1 U $ - %8-58 Conditio Formatt Clipboard Font Alignment Number B32 X D E F A B 3 9 Increase (decrease) in Operating Income 2) Banner Company has 1,300 tires on-hand that cannot be sold through their regular channels due to some deformities. However, there are Be customers who are interested in buying these tires at a lower price. What is the minimum price Banner Company should charge for these irregular Unit product cost for minimum selling price: 5 Briefly explain: 3 THE ! Merge & Centet $ - % ipboard Font Condit Formatt Alignment Number 32 X fx A B D E Required for Part B "Add or Drop" (5 marks) Use the information below regarding three products that are produced by Alpha Inc. to respond to the manager's questions. Tables 975,000 $ Chairs 650,000 $ Note Couches 1,300,000 Sales $ Costs: Direct materials Direct labour Material handling Depreciation Selling & marketing General administration Total costs Operating income $ 390,000 97,500 58,500 65,000 97,500 195,000 903,500 71,500 S 286,000 78,000 52,000 62,400 78,000 130,000 686,400 (36,400) 520,000 104,000 78,000 93,600 156,000 260,000 1,211,600 88,400 Note a Noteb Notec Noted Note a: Noteb Note : Noted: Material handling is a variable cost and increases or decreases based on number of units produced. Depreciation is calculated on a straight-line basis. 50% of the selling and marketing is variable sales commissions. The remaining 50% is allocated to each product line. $227,500 of the general administration expenses include the supervisor's salary. The manager's salary can be traced to each S 78,000 Tables s 65,000 Chairs S 84,500 Couches S 227.500 Total supervisot salary #5 Relevant Costing The Chairs product line looks unprofitable. Should it be dropped? Instead of supervising the Chairs product line, the supervisor would be moved to head office to replace an accounting clerk who was paid $52,000 per year. The supervisor would still be responsible for the remaining divisions. Assume that the plant space would remainide (2 marks) Area to show your work: Vet advantage (disadvantage) of dropping the Chairs product line Should the Chairs product line be dropped (yeso)? 26 instead of having idle plant space, assume the space that was used by the Chairs product line could now be used by the Couches product line 7 This increased production of couches would increase the sales of the Couches product line by $390,000. Should the Chairs product line be dropped 98 and the capacity be used to produce Couches? (3 marks) 09 00 Hint: Start with the net advantage (disadvantage) calculated in /) above. 01 Area to show your work 02 03 14 05 06 07 09 11 09 10 11 12 13 74 Net advantage (disadvantage) of dropping the Chairs product line 15 16 Should the Chairs product line be dropped (yeso)? 17 18. Required for Part Make or Buy 110 marks) ARA Costing 2 Variable costing 3 Budgeting #4 Segment Reporting #5 Relevant Costing Merge & Center - $ - % -1 Clipboard Conditio Formatter Font Alignment Number 332 fy A B D 7 8 Required for Part) "Make or Buy" (10 marks) 9 Regal Company makes 26,000 units of Part M20 that it later uses to produce a good that it manufactures. The unit product cost of Part M20 follows: 0 1 Direct Materials 32.11 2 Direct Labour 21.19 3 Variable Manufacturing Overhead 2.99 Fixed Manufacturing Overhead 17.42 5 Total unit cost of Part M20 73.71 6 7 8) The total product cost is $73.71. Identify the relevant costs in making the decision whether to make or buy Part M20. (4 marks) 9 0 Direct Materials 1 Direct Labour 2 Variable Manufacturing Overhead 3 Fixed Manufacturing Overhead 4 Relevant costs to make 5 136 137 ) calculate the net advantage (disadvantage of buying Part M20 rather than making it. (3 marks) 138 139 Alternatively, Regal Company can buy Part M20 from a supplier $ 67.34 per unit 140 741 of Regal Company buys Part M20 from a supplier, they will use the machinery that was previously used to make Part M20 to make additional units 142 of a product they can sell. These additional units would generate an additional contribution margin per year of $57,200. 44 if they buy the part, $6.63 of the fixed manufacturing overhead is allocated to Part M20 and would be re-allocated to the remaining products it 145 the part is purchased from a supplier. 46 Make Buy 147 Area to show your work 148 19 150 15 152 153 154 55 Total costs 156 157 Net Advantage (Disadvantage) of Purchasing 5 Clipboard 12 Font Alignment Nur B32 B D A 153 54 55 Total costs 56 57 Net Advantage (Disadvantage) of Purchasing 58 59 m) What is the maximum price Regal Company should pay a supplier if they need 20,000 units per year. (3 marks) 50 Area to show your work 51 52 53 54 55 6 Maximum acceptable purchase price per unit 7 8 1 2 2. Data Formulas Review View Help Page Layout General 12 ilili Wrap Text Merge & Center A- MI M $ - % 38-28 Conditional Format as Cell Formatting Table Styles Number Alignment Font Styles A D F Cuestioa 5-Relevant costs for Decision Making /21 marles total) READ CAREFULLY*** THIS QUESTION HAS DISTINCT AND UNRELATED PARTS: PARTA), PART B AND PARTC. THESE PARTS SHOULD BE ANSWERED INDEPENDENTLY AND SEPARATE FILOM PART A6 marks total) Some information about Banner Company's sales and activity are given below: Per unit sales and costs Selling price per unit $ 41.60 $ s Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead per unit 5 Variable Selling expenses Fored selling expenses per unit SUS 13.00 5.85 2.99 6.50 1.56 4.55 s $ 3 Other information Total plant capacity of tires 1 Current sales units of tires) 2. Pued manufacturing overhead Paed selling expenses 4 1 ABC Costing $ $ 117,000 78,000 507.000 354,900 #2 Variable costing * Budgeting 4 Segment Reporting 5 Relevant Costing P Type here to search 1 lipboard Font Alignment S1 X A B D Required for Part A) Relevant Costs (6 marks) Banner company has capacity to produce 117,000 tires without an increase in fixed manufacturing costs. However, their current sales are only 78,000 tires. The marketing manager projects that they can increase sales by 30% if they increase their fixed selling expenses by $104,000. (2 Increase in sales Increase in fixed selling expenses Area to show your work 3096 104,000 $ Increase (decrease) in Operating Income 0 Banner Company has 1,300 tires on-hand that cannot be sold through their regular channels due to some deformities. However, there are customers who are interested in buying these tires at a lower price. What is the minimum price Banner company should charge for the intes Unit product cost for minimum selling price: #5 Relevant Costing Briefly explain: 3 Budgeting 4 Segment Reporting 1 ABG costing #2 Vanable costing TILL Page Layout HOITUS Dalis Review View Help Calibri 12 ' . 23 Wrap Text General Pante B T U- HE Merge & Center S. %98-98 Condit Formatt lipboard Font Alignment Number 51 X B D E F Increase (decrease) in Operating Income m) Banner Company has 1,300 tires on-hand that cannot be sold through their regular channels due to some deformities. However, there are customers who are interested in buying these tires at a lower price. What is the minimum price Banner Company should charge for these irregular Unit product cost for minimum selling price: Briefly explain: Required for Part B) Add or Drop (5 marks] Use the information below regarding three products that are produced by Alpha Inc. to respond to the manager's questions. Note Tables 975,000 $ Chairs 650,000 $ Couches 1,300,000 S 520,000 Sales Sosts: Direct materials Direct labour Material handling Depreciation 390,000 97,500 58,500 65.000 286,000 78,000 52,000 62.400 104,000 78,000 93,600 Note a Note 5 B plexi General Menge a Center - pboard $ - % 9 Font Alignment Conditional form Formatting Table Styles 51 Number A A B D E Required for Part B] Add or Drop" (5 marks) Use the information below regarding three products that are produced by Alpha Inc. to respond to the manager's questions. Tables Chairs Couches Note Sales $ 975,000 $ 650,000 $ 1,300,000 Costs: Direct materials 390,000 286,000 520,000 Direct labour 97,500 78,000 104,000 Material handling 58,500 52,000 78,000 Noted Depreciation 65,000 62,400 93,600 Noteb Selling & marketing 97,500 78,000 156,000 Notec General administration 195,000 130,000 260,000 Noted Total costs 903,500 686,400 1,211,600 Operating income $ 71,500 $ (36,400) S 88,400 Vote : Vote b Vote c. Voted: Material handling is a variable cost and increases or decreases based on number of units produced. Depreciation is calculated on a straight-line basis. 50% of the selling and marketing is variable sales commissions. The remaining 50% is allocated to each product line. $227,500 of the general administration expenses include the supervisor's salary. The manager's salary can be traced to each product auf $ 78,000 Tables 65,000 Chairs 84,500 Couches 227,500 Total supervisor salary uno HI ABG costing +2 Variable costing # Budgeting #4 Segment Reporting a5 Relevant Costing Toe here to search All ME Merge Center $ -% ! Cond Forma Font Alignment 15 Number fo B D A 775 E F 76 ) The Chales product line looks unprofitable. Should it be dropped? Instead of supervising the Chairs product line, the supervisor would be moved to 77 head office to replace an accounting clerk who was paid $52,000 per year. The supervisor would still be responsible for the remaining divisions. 78 Assume that the plant space would remain idle. (2 marks) 79 Area to show your work: 80 81 82 83 84 85 86 87 88 89 90 91 92 Net advantage (disadvantage) of dropping the Chairs product line 93 94 Should the Chairs product line be dropped (yeso)? 95 96 ) Instead of having idle plant space, ime the space that was used the Chairs product line could now be used by the Couches product line 27 This increased production of couches would increase the sales of the Couches product line by $390,000. Should the Chairs product line bedropped 98 and the capacity be used to produse couches 13 marks) 41 ABS Costing 2 Variable costing 5 Budgeting 4 Segment Reporting #5 Relevant Costing HE Merge Center - $ - % Cond Toim Clipboard 6 Font Alignment Number GS1 X A G D F 6. Instead of having idle plant space, assume the space that was used by the Chairs product line could now be used by the Couches product line. This increased production of couches would increase the sales of the Couches product line by $990,000. Should the Chairs product line be dropped Band the capacity be used to produce Couches? (3 marks) Hint: Start with the net advantage (disadvantage) calculated in i) above. 1 Area to show your work Net advantage (disadvantage) of dropping the Chairs product line should the Chairs product line be dropped (yeso)? Required for Part Make or Buy" (10 marks) Regal Company makes 26,000 units of Part M20 that it later uses to produce a good that it manufactures, The unit product cost of Part M20 follow ABG costing 2 Variable costing HB Budgeting 24 Segment Reporting #5 Relevant Costing Alignment Format 51 Number X A B C D E Required for Part) "Make or Buy" (10 marks) Regal Company makes 26,000 units of Part M20 that it later uses to produce a good that it manufactures. The unit product cost of Part M20 follows Direct Materials Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead Total unit cost of Part M20 32.11 21.19 2.99 17.42 73.71 0 The total product cost 15 $73.71. Identify the relevant costs in making the decision whether to make or buy Part M20. (4 maris) Direct Materials Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead Relevant costs to make 6 calculate the net advantage (disadvantage of buying Part M20 rather than making it. (3 marks) 67.34 per unit Alternatively. Regal Company can buy Part M20 from a suppliers #5 Relevant Costing #ABC Costing #2 Variable costing #3 Budgeting #4 Segment Reporting TE o Type here to search Calibri 12 - ID > General Paste U I a A E Wrap Text Merge & Center IMI $ - % 88-98 Condit Formatt Clipboard Font Alignment Number G51 A 143 B D E 137 ) Calculate the net advantage (disadvantage) of buying Part M20 rather than making it. (3 marks) 138 139 Alternatively, Regal Company can buy Part M20 from a supplier $ 67.34 per unit 140 141 f Regal Company buys Part M20 from a supplier, they will use the machinery that was previously used to make Part M20 to make additional units 142 of a product they can sell. These additional units would generate an additional contribution margin per year of $57,200. 144 If they buy the part. $6.63 of the fixed manufacturing overhead is allocated to Part M20 and would be re-allocated to the remaining products if 145 the part is purchased from a supplier. 146 147 Area to show your work Make Buy 148 149 150 151 152 153 154 155 Total costs 156 157 Net Advantage (Disadvantage) of Purchasing 158 159 What is the maximum price Regal Company should pay a supplier if they need 20,000 units per year. (3 marks) 160 Area to show your work #3 Budgeting 25 Relevant Costing #2 Variable costing - Segment Reporting ABC Costing Clipboard 19 Font Fy Alignment 21 Number G51 fo B G D E F 151 152 153 154 155 Total costs 156 157 Net Advantage (Disadvantage) of Purchasing 158 159 m) What is the maximum price Regal Company should pay a supplier if they need 20,000 units per year. (3 marks) 160 Area to show your work 161 162 163 164 66 Maximum acceptable purchase price per unit 167 168 169 70 171 172 123 Merge Center - $ - % - Condit Format Tipboard 5 Font Alignment Number 32 > A B D E F APREAD CAREFULLY THIS QUESTION HAS 3 DISTINCT AND UNRELATED PARTS: PART A), PART B) AND PARTC. THESE PARTS SHOULD BE ANSWERED INDEPENDENTL PARTA (6 marks total) Some information about Banner Company's sales and activity are given below: Per unit sales and costs Selling price per unit S 41.60 Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead per unit Variable Selling expenses Fixed selling expenses per unit s $ S $ $ S 13.00 5.85 2.99 6.50 1.56 4.55 Other information Total plant capacity (# of tires) Current Sales units of tires) Fixed manufacturing overhead Fixed selling expenses 117.000 78,000 507,000 354,900 S S Required for Part Ali Relevant costs 6 marks ABd Costing 2 Variable costing #5 Relevant Costing #4 Segment Reporting 8 Budgeting TERChoose Paste D 5 Required for Part A "Relevant Costs (6 marks) 6) Banner company has capacity to produce 117,000 tires without an increase in fixed manufacturing costs. However, their current sales are only 7 78,000 tires. The marketing manager projects that they can increase sales by 30% if they increase their fixed selling expenses by $104,000.12 3 Increase in sales 30% Increase in fixed selling expenses $ 104,000 Area to show your work Increase (decrease) in Operating Income formities. However there are IP ub Paste Calibri 12 ' ' a-A- Accounting Wrap Text Merge Center B 1 U $ - %8-58 Conditio Formatt Clipboard Font Alignment Number B32 X D E F A B 3 9 Increase (decrease) in Operating Income 2) Banner Company has 1,300 tires on-hand that cannot be sold through their regular channels due to some deformities. However, there are Be customers who are interested in buying these tires at a lower price. What is the minimum price Banner Company should charge for these irregular Unit product cost for minimum selling price: 5 Briefly explain: 3 THE ! Merge & Centet $ - % ipboard Font Condit Formatt Alignment Number 32 X fx A B D E Required for Part B "Add or Drop" (5 marks) Use the information below regarding three products that are produced by Alpha Inc. to respond to the manager's questions. Tables 975,000 $ Chairs 650,000 $ Note Couches 1,300,000 Sales $ Costs: Direct materials Direct labour Material handling Depreciation Selling & marketing General administration Total costs Operating income $ 390,000 97,500 58,500 65,000 97,500 195,000 903,500 71,500 S 286,000 78,000 52,000 62,400 78,000 130,000 686,400 (36,400) 520,000 104,000 78,000 93,600 156,000 260,000 1,211,600 88,400 Note a Noteb Notec Noted Note a: Noteb Note : Noted: Material handling is a variable cost and increases or decreases based on number of units produced. Depreciation is calculated on a straight-line basis. 50% of the selling and marketing is variable sales commissions. The remaining 50% is allocated to each product line. $227,500 of the general administration expenses include the supervisor's salary. The manager's salary can be traced to each S 78,000 Tables s 65,000 Chairs S 84,500 Couches S 227.500 Total supervisot salary #5 Relevant Costing The Chairs product line looks unprofitable. Should it be dropped? Instead of supervising the Chairs product line, the supervisor would be moved to head office to replace an accounting clerk who was paid $52,000 per year. The supervisor would still be responsible for the remaining divisions. Assume that the plant space would remainide (2 marks) Area to show your work: Vet advantage (disadvantage) of dropping the Chairs product line Should the Chairs product line be dropped (yeso)? 26 instead of having idle plant space, assume the space that was used by the Chairs product line could now be used by the Couches product line 7 This increased production of couches would increase the sales of the Couches product line by $390,000. Should the Chairs product line be dropped 98 and the capacity be used to produce Couches? (3 marks) 09 00 Hint: Start with the net advantage (disadvantage) calculated in /) above. 01 Area to show your work 02 03 14 05 06 07 09 11 09 10 11 12 13 74 Net advantage (disadvantage) of dropping the Chairs product line 15 16 Should the Chairs product line be dropped (yeso)? 17 18. Required for Part Make or Buy 110 marks) ARA Costing 2 Variable costing 3 Budgeting #4 Segment Reporting #5 Relevant Costing Merge & Center - $ - % -1 Clipboard Conditio Formatter Font Alignment Number 332 fy A B D 7 8 Required for Part) "Make or Buy" (10 marks) 9 Regal Company makes 26,000 units of Part M20 that it later uses to produce a good that it manufactures. The unit product cost of Part M20 follows: 0 1 Direct Materials 32.11 2 Direct Labour 21.19 3 Variable Manufacturing Overhead 2.99 Fixed Manufacturing Overhead 17.42 5 Total unit cost of Part M20 73.71 6 7 8) The total product cost is $73.71. Identify the relevant costs in making the decision whether to make or buy Part M20. (4 marks) 9 0 Direct Materials 1 Direct Labour 2 Variable Manufacturing Overhead 3 Fixed Manufacturing Overhead 4 Relevant costs to make 5 136 137 ) calculate the net advantage (disadvantage of buying Part M20 rather than making it. (3 marks) 138 139 Alternatively, Regal Company can buy Part M20 from a supplier $ 67.34 per unit 140 741 of Regal Company buys Part M20 from a supplier, they will use the machinery that was previously used to make Part M20 to make additional units 142 of a product they can sell. These additional units would generate an additional contribution margin per year of $57,200. 44 if they buy the part, $6.63 of the fixed manufacturing overhead is allocated to Part M20 and would be re-allocated to the remaining products it 145 the part is purchased from a supplier. 46 Make Buy 147 Area to show your work 148 19 150 15 152 153 154 55 Total costs 156 157 Net Advantage (Disadvantage) of Purchasing 5 Clipboard 12 Font Alignment Nur B32 B D A 153 54 55 Total costs 56 57 Net Advantage (Disadvantage) of Purchasing 58 59 m) What is the maximum price Regal Company should pay a supplier if they need 20,000 units per year. (3 marks) 50 Area to show your work 51 52 53 54 55 6 Maximum acceptable purchase price per unit 7 8 1 2 2