Kung Thang

Problem 1
Per unit
Incremental costs:
Direct materials 75
Direct labor 55
Variable manufacturing overhead 36
Selling cost 10
Minimum Selling price 176

Problem 2 A B C
Selling price 80 56 70
Variable expenses
Direct materials 24 15 9
Other variable expenses 24 27 40
Total variable expenses 48 42 49
Contribution margin 32 14 21
Produce one unit 3 3 3
Pound of material required per unit 8 5 3

1 Contribution margin per pound 4 2.8 7

2 Product Rank
C First
B Second
A Third

Problem 3 Product M Product N Product P

Sales value after further processing 300000 285000 370000
Sales value at split-off 200000 155000 325000
incremental revenue 100000 130000 45000
further processing costs 85000 110000 65000
incremental profit or loss 15000 20000 -20000

Product P should be sold at the split-

Point
Product M and N should be procesed
furhter

Problem 4
 Fixed costs

Depreciation 1600
Insurance 1200
Garage Rent 360
Automobile tax and license 40
3200

Miles travelled 10000

Fixed cost per mile 0.32

Variable cost permile 0.14

1 Average cost per mile 0.46

2 I think the operating variable costs will be relevant in this decsion because they will be changed . butth

3 The insurance, tax and licesne costs would go up, so I would say that those costs are relevant in estmat
e they will be changed . butthe fixed cost will be irrelevant in this decision. Because whether she use her own car or rent a care,

se costs are relevant in estmating the incremental cost of owning the more expensive car.
own car or rent a care, The fixed cost will be constant