16

Sales P540,000
less: Variable costs 270,000
Contribution Margin 270,000
Less: Fixed cost 150,000
Operating income P120,000

17
Direct materials 4
Direct Labor 5
Overhead cost 2
Selling cost 3
Minimum selling price per unit 14

18
Relevant cost to make 240,000
Purchase cost 300,000
less:
Savings in manufacturing cost 45,000
avoidable fixed overhead 50,000 95,000 205,000
Difference in favor of buy alternative 35,000

19
Increase in sales 180,000
less: increase in variable cost 150,000
net increase in income 30,000

20 R S T
Sales 200,000 200,000 200,000
less: Variable costs 120,000 80,000 40,000
Contribution margin 80,000 120,000 160,000

21
R S T
Sales 240,000 240,000 240,000
less: Variable costs 180,000 120,000 60,000
Contribution margin 60,000 120,000 180,000
less: fixed cost 40,000 80,000 120,000
operating income 20,000 40,000 60,000

22
Contribution margin 80,000
less: Fixed cost 40,000
Old operating income 40,000
less: New operating income 20,000
Difference (decrease) 20,000

23
Sales 1,200,000
less: Variable costs
Direct materials 300,000
Direct Labor 400,000
Factory overhead 80,000
Marketing expenses 70,000
Administrative expenses 50,000
Total variable costs 900,000
Contribution margin 300,000
less; Fixed cost
factory overhead 50,000
marketing expenses 30,000
administrative expenses 20,000
increase in fixed cost 10,000 110,000
profit 190,000

24
Sales
less: Variable costs
Direct materials 275,000
Direct Labor 375,000
Factory overhead 80,000
Marketing expenses 70,000
Administrative expenses 50,000
Total variable costs 850,000
Contribution margin 350,000
less; Fixed cost
factory overhead 50,000
marketing expenses 30,000
administrative expenses 20,000
decrease in fixed cost 6,250 93,750
profit 256,250

25
Direct materials 10,000
Direct Labor 40,000
Variable Overhead 20,000
Total Variable costs 70,000
Avoidable fixed overhead 10,000
total 80,000

26
Avoidable fixed overhead 4
Direct materials 4
Direct Labor 16
Variable Overhead 18
Total 42
multiply by 20,000
total relevant cost to make the part 840,000

27
Purchase cost 12,500
Variable Cost to make 10,000
Savings of making the blade 2,500

28
Selling price 17
less: Variable COGS per unit 12
contribution margin 5
multiplied by: units to be sold
under 2,000
special order
increase in operating income 10,000

29
Budgeted operating income
contribution margin 600,000
less: fixed cost 400,000
net operating income 200,000

operating income under proposal

Sales 2,000,000
less: variable costs 1,120,000
Contribution margin 880,000
less: fixed cost 520,000 360,000
increase in budgeted operating income 160,000

30
Direct Labor 9
Direct materials 8
Factory overhead variable 7
shipping 4
total 28

31
Sales 80,000
Variable Cost 32,000
Contribution margin 48,000
fixed cost 50,000
increase -2,000

32 east west west is eliminated

Sales 720,000
variable costs 370,000
Traceable fixed cost 130,000
Allocated traceable common corp co 120,000 50,000
operating income (loss) 100,000
less: west 50,000
total income 50,000

33 U V W X Y
Rent income 1,000 1,210 2,347 1,878 1,065
expenses 800 1,300 2,600 2,400 1,300
Contribution margin 200 -90 -253 -522 -235
Contribution margin percentage 80% -1.70% -1.11% -1.28% -1.22%
Corporate expenses 160 194 376 300 170
Operating income 40 -284 -626 -822 -405

34
Purchase cost 180,000
less: Rent income 15,000
Net purchase cost 165,000
add: Fixed manufacturing
overhead 30,000
savings
total cost to buy 195,000
total manufacturing cost 190,000
cheaper to make 5,000
Total
7,500
8,400
-900
-1.12%
1,200
-2,100