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Chapter 7
Differential Analysis: The Key to Decision
Making
Solutions to Questions
7-1 A relevant cost is a cost that differs in as a result of dropping the product is less than
total between the alternatives in a decision. the fixed costs that would be avoided. Even in
that situation the product may be retained if it
7-2 An incremental cost (or benefit) is the promotes the sale of other products.
change in cost (or benefit) that will result from
some proposed action. An opportunity cost is 7-9 Allocations of common fixed costs can
the benefit that is lost or sacrificed when make a product (or other segment) appear to be
rejecting some course of action. A sunk cost is a unprofitable, whereas in fact it may be
cost that has already been incurred and that profitable.
cannot be changed by any future decision.
7-10 If a company decides to make a part
7-3 No. Variable costs are relevant costs internally rather than to buy it from an outside
only if they differ in total between the supplier, then a portion of the company’s
alternatives under consideration. facilities have to be used to make the part. The
company’s opportunity cost is measured by the
7-4 No. Not all fixed costs are sunk—only benefits that could be derived from the best
those for which the cost has already been alternative use of the facilities.
irrevocably incurred. A variable cost can be a
sunk cost if it has already been incurred. 7-11 Any resource that is required to make
products and get them into the hands of
7-5 No. A variable cost is a cost that varies customers could be a constraint. Some examples
in total amount in direct proportion to changes are machine time, direct labor time, floor space,
in the level of activity. A differential cost is the raw materials, investment capital, supervisory
difference in cost between two alternatives. If time, and storage space. While not covered in
the level of activity is the same for the two the text, constraints can also be intangible and
alternatives, a variable cost will not be affected often take the form of a formal or informal
and it will be irrelevant. policy that prevents the organization from
furthering its goals.
7-6 No. Only those future costs that differ
between the alternatives are relevant. 7-12 Assuming that fixed costs are not
affected, profits are maximized when the total
7-7 Only those costs that would be avoided contribution margin is maximized. A company
as a result of dropping the product line are can maximize its total contribution margin by
relevant in the decision. Costs that will not be focusing on the products with the greatest
affected by the decision are irrelevant. amount of contribution margin per unit of the
constrained resource.
7-8 Not necessarily. An apparent loss may
be the result of allocated common costs or of 7-13 Joint products are two or more products
sunk costs that cannot be avoided if the product that are produced from a common input. Joint
is dropped. A product should be discontinued costs are the costs that are incurred up to the
only if the contribution margin that will be lost split-off point. The split-off point is the point in
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292 Managerial Accounting for Managers, 3rd Edition
the manufacturing process where joint products 7-15 If the incremental revenue from further
can be recognized as individual products. processing exceeds the incremental costs of
further processing, the product should be
7-14 Joint costs should not be allocated processed further.
among joint products for decision-making
purposes. If joint costs are allocated among the 7-16 Most costs of a flight are either sunk
joint products, then managers may think they costs, or costs that do not depend on the
are avoidable costs of the end products. number of passengers on the flight.
However, the joint costs will continue to be Depreciation of the aircraft, salaries of personnel
incurred as long as the process is run regardless on the ground and in the air, and fuel costs, for
of what is done with one of the end products. example, are the same whether the flight is full
Thus, when making decisions about the end or almost empty. Therefore, adding more
products, the joint costs are not avoidable and passengers at reduced fares when seats would
are irrelevant. otherwise be empty does little to increase the
total costs of operating the flight, but increases
the total contribution and total profit.

Solutions Manual, Chapter 7 293
Exercise 7-1 (15 minutes)
Case 1 Case 2
Not Not
Item Relevant Relevant Relevant 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
A3000 machine ............ X X
h. Market value—Model
B3800 machine (cost) ... X X
i. Fixed manufacturing
overhead ..................... X X
j. Variable selling expense .. X X
k. Fixed selling expense ...... X X
l. General administrative
overhead ..................... X X

1. No, the housekeeping program should not be discontinued. It is actually
generating a positive program segment margin and is, of course,
providing a valuable service to seniors. Computations to support this
conclusion follow:
Contribution margin lost if the housekeeping
program is dropped .......................................... $(80,000)
Fixed costs that can be avoided:
Liability insurance ............................................. $15,000
Program administrator’s salary ........................... 37,000 52,000
Decrease in net operating income for the
organization as a whole..................................... $(28,000)
Depreciation on the van is a sunk cost and the van has no salvage value
since it would be donated to another organization. The general
administrative overhead is allocated and none of it would be avoided if
the program were dropped; thus it is not relevant to the decision.
The same result can be obtained with the alternative analysis below:
Difference:
Net
Total If Operating
House- Income
Current keeping Is Increase or
Total Dropped (Decrease)
Revenues .................................... $900,000 $660,000 $(240,000)
Variable expenses........................ 490,000 330,000 160,000
Contribution margin..................... 410,000 330,000 (80,000)
Fixed expenses:
Depreciation* ........................... 68,000 68,000 0
Liability insurance ..................... 42,000 27,000 15,000
Program administrators’ salaries 115,000 78,000 37,000
General administrative overhead 180,000 180,000 0
Total fixed expenses .................... 405,000 353,000 52,000
Net operating income (loss) ......... $ 5,000 $(23,000) $ (28,000)
*Includes pro-rated loss on disposal of the van if it is donated to a

charity.

Exercise 7-2 (continued)
2. To give the administrator of the entire organization a clearer picture of
the financial viability of each of the organization’s programs, the general
administrative overhead should not be allocated. It is a common cost
that should be deducted from the total program segment margin.
Following the format introduced in an earlier chapter for a segmented
income statement, a better income statement would be:
Home Meals on House-
Total Nursing Wheels keeping
Revenues ............................ $900,000 $260,000 $400,000 $240,000
Variable expenses................ 490,000 120,000 210,000 160,000
Contribution margin............. 410,000 140,000 190,000 80,000
Traceable fixed expenses:
Depreciation ..................... 68,000 8,000 40,000 20,000
Liability insurance ............. 42,000 20,000 7,000 15,000
Program administrators’
salaries .......................... 115,000 40,000 38,000 37,000
Total traceable fixed
expenses .......................... 225,000 68,000 85,000 72,000
Program segment margins ... 185,000 $ 72,000 $105,000 $ 8,000
General administrative
overhead .......................... 180,000
Net operating income (loss) . $ 5,000

1. Per Unit
Differential
Costs 15,000 units
Make Buy Make Buy
Cost of purchasing ...................... $20 $300,000
Direct materials ........................... $ 6 $ 90,000
Direct labor ................................. 8 120,000
Variable manufacturing overhead . 1 15,000
Fixed manufacturing overhead,
traceable1 ................................. 2 30,000
Fixed manufacturing overhead,
common................................... 0 0 0 0
Total costs .................................. $17 $20 $255,000 $300,000
Difference in favor of continuing

to make the parts ..................... $3 $45,000
1
Only the supervisory salaries can be avoided if the parts are
purchased. The remaining book value of the special equipment is a
sunk cost; hence, the $3 per unit depreciation expense is not
relevant to this decision.
Based on these data, the company should reject the offer and should
continue to produce the parts internally.
2. Make Buy
Cost of purchasing (part 1) ......................... $300,000
Cost of making (part 1) .............................. $255,000
Opportunity cost—segment margin forgone
on a potential new product line ................ 65,000
Total cost ................................................... $320,000 $300,000
Difference in favor of purchasing from the

outside supplier ....................................... $20,000
Thus, the company should accept the offer and purchase the parts from
the outside supplier.

Only the incremental costs and benefits are relevant. In particular, only the
variable manufacturing overhead and the cost of the special tool are
relevant overhead costs in this situation. The other manufacturing
overhead costs are fixed and are not affected by the decision.
Per Total
Unit 10 bracelets
Incremental revenue ............................ $349.95 $3,499.50
Incremental costs:
Variable costs:
Direct materials............................... 143.00 1,430.00
Direct labor..................................... 86.00 860.00
Variable manufacturing overhead ..... 7.00 70.00
Special filigree ................................ 6.00 60.00
Total variable cost ............................. $242.00 2,420.00
Fixed costs:
Purchase of special tool ................... 465.00
Total incremental cost .......................... 2,885.00
Incremental net operating income ......... $ 614.50
Even though the price for the special order is below the company's regular
price for such an item, the special order would add to the company's net
operating income and should be accepted. This conclusion would not
necessarily follow if the special order affected the regular selling price of
bracelets or if it required the use of a constrained resource.

1. The most profitable use of the constrained resource is determined by
the contribution margin per unit of the constrained resource. In part 1,
the constrained resource is time on the plastic injection molding
machine. Therefore, the analysis would proceed as follows:
Ski Golf Fishing
Vault Caddy Quiver
Selling price per unit.................. $220 $300 $175
Variable cost per unit ................ 60 120 55
Contribution margin per unit (a) . $160 $180 $120
Plastic injection molding machine
processing time required to
produce one unit (b) ............... 4 minutes 5 minutes 2 minutes
Contribution margin per unit of
the constrained resource $40 per $36 per $60 per
(a) ÷ (b) ................................ minute minute minute
Production of the Fishing Quiver product would be the most profitable
use of the constrained resource which is, in this case, time on the plastic
injection molding machine. The contribution margin per minute is $60
for this product, which is larger than for the other two products.
2. In this part, the constraint is the available pounds of plastic pellets.

Ski Golf Fishing
Vault Caddy Quiver
Selling price per unit.................. $220 $300 $175
Variable cost per unit ................ 60 120 55
Contribution margin per unit (a) . $160 $180 $120
Pounds of plastic pellets required
to produce one unit (b) ........... 5 pounds 6 pounds 5 pounds
the constrained resource $32 per $30 per $24 per
(a) ÷ (b) ................................ pound pound pound
In this case, production of the Ski Vault would be the most profitable
use of the constrained resource. The contribution margin per unit of the
constrained resource for this product is $32, which is larger than for the
other two products.

3. The Golf Caddy product has the largest unit contribution margin, but it
is not the most profitable use of the constrained resource in either case
above. This happens because the Golf Caddy uses more of the
constrained resources in proportion to its contribution margin than the
other two products. In other words, more of the other products can be
produced for a given amount of the constrained resource and this more
than makes up for their lower contribution margins.

1. The value of relaxing the constraint can be determined by computing
the contribution margin per unit of the constrained resource:
Leather
Library
Chair
Selling price per unit................................................... $1,800
Variable cost per unit ................................................. 1,200
Contribution margin per unit (a) .................................. $ 600
Upholstery shop time required to produce one unit (b) . 12 hours
Contribution margin per unit of the constrained
resource (a) ÷ (b) ................................................... $50 per hour
The company should be willing to pay up to $50 per hour to keep the
upholstery shop open after normal working hours.
2. To answer this question, it is desirable to compute the contribution

margin per unit of the constrained resource for all three products:
Chippen-
Gains- Leather dale
borough Library Fabric
Armchair Chair Armchair
Selling price per unit.................. $1,300 $1,800 $1,400
Variable cost per unit ................ 800 1,200 1,000
Contribution margin per unit (a) . $ 500 $ 600 $ 400
Upholstery shop time required to
produce one unit (b) ............... 8 hours 12 hours 5 hours
the constrained resource $62.50 $50.00 $80.00
(a) ÷ (b) ................................ per hour per hour per hour
The offer to upholster chairs for $45 per hour should be accepted. The
time would be used to upholster Chippendale Fabric Armchairs. If this
increases the total production and sales of those chairs, the time would
be worth $80 per hour—a net gain of $35 per hour. If Chippendale
Fabric Armchairs are already being produced up to demand, then having
these chairs upholstered in the other company would free up capacity to
produce more of the other two chairs. In both cases, the additional time
is worth more than $45 per hour.

Product X Product Y Product Z

Sales value after further processing .. $80,000 $150,000 $75,000
Sales value at split-off point ............. 50,000 90,000 60,000
Incremental revenue ........................ 30,000 60,000 15,000
Cost of further processing ................ 35,000 40,000 12,000
Incremental profit (loss) ................... $(5,000) 20,000 3,000
Products Y and Z should be processed further, but not Product X.

Merifulon should be processed further:
Sales value after further processing .................. $60,000
Sales value at the split-off point ....................... 40,000
Incremental revenue from further processing .... 20,000
Cost of further processing ................................ 13,000
Profit from further processing .......................... $ 7,000
The $10,000 in allocated common costs (1/3 × $30,000) will be the same
regardless of which alternative is selected, and hence is not relevant to the
decision.

The company should accept orders first for Product Z, second for Product
X, and third for Product Y. The computations are:
Product Product Product

X Y Z
(a) Direct materials required per unit .... $24.00 $15.00 $9.00
(b) Cost per pound ............................... $3.00 $3.00 $3.00
(c) Pounds required per unit (a) ÷ (b) ... 8 5 3
(d) Contribution margin per unit ........... $32.00 $14.00 $21.00
Contribution margin per pound of
materials used (d) ÷ (c) ............... $4.00 $2.80 $7.00
Because Product Z uses the least amount of material per unit of the three
products, and because it is the most profitable of the three in terms of its
use of this constrained resource, some students will immediately assume
that this is an infallible relationship. That is, they will assume that the way
to spot the most profitable product is to find the one using the least
amount of the constrained resource. The way to dispel this notion is to
point out that Product X uses more material (the constrained resource)
than does Product Y, but yet it is preferred over Product Y. The key factor is
not how much of a constrained resource a product uses, but rather how
much contribution margin the product generates per unit of the
constrained resource.

No, the overnight cases should not be discontinued. The computations are:
Contribution margin lost if the cases are
discontinued ................................................. $(260,000)
Less fixed costs that can be avoided if the
cases are discontinued:
Salary of the product line manager.............. $ 21,000
Advertising ................................................ 110,000
Insurance on inventories ............................ 9,000 140,000
Net disadvantage of dropping the cases............ $(120,000)
The same solution can be obtained by preparing comparative income

statements:
Difference:
Net Operating
Keep Drop Income
Overnight Overnight Increase or
Cases Cases (Decrease)
Sales ............................................ $450,000 $ 0 $(450,000)
Variable expenses:
Variable manufacturing expenses 130,000 0 130,000
Sales commissions ..................... 48,000 0 48,000
Shipping .................................... 12,000 0 12,000
Total variable expenses ................. 190,000 0 190,000
Contribution margin ...................... 260,000 0 (260,000)
Fixed expenses:
Salary of line manager ................ 21,000 0 21,000
General factory overhead ............ 104,000 104,000 0
Depreciation of equipment .......... 36,000 36,000 0
Advertising—traceable ................ 110,000 0 110,000
Insurance on inventories............. 9,000 0 9,000
Purchasing department ............... 50,000 50,000 0
Total fixed expenses...................... 330,000 190,000 140,000
Net operating loss ......................... $ (70,000) $(190,000) $(120,000)

1. Fixed cost per mile ($3,500* ÷ 10,000 miles) . $0.35

Variable operating cost per mile ..................... 0.08
Average cost per mile .................................... $0.43
* Depreciation ............................ $2,000
Insurance ................................ 960
Garage rent ............................. 480
Automobile tax and license ....... 60
Total ....................................... $3,500
2. The variable operating costs would be relevant in this situation. The

depreciation would not be relevant since it relates to a sunk cost.
However, any decrease in the resale value of the car due to its use
would be relevant. The automobile tax and license costs would be
incurred whether Samantha decides to drive her own car or rent a car
for the trip during spring break and are therefore irrelevant. It is unlikely
that her insurance costs would increase as a result of the trip, so they
are irrelevant as well. The garage rent is relevant only if she could avoid
paying part of it if she drives her own car.
3. When figuring the incremental cost of the more expensive car, the
relevant costs would be the purchase price of the new car (net of the
resale value of the old car) and the increases in the fixed costs of
insurance and automobile tax and license. The original purchase price of
the old car is a sunk cost and is therefore irrelevant. The variable
operating costs would be the same and therefore are irrelevant.
(Students are inclined to think that variable costs are always relevant
and fixed costs are always irrelevant in decisions. This requirement
helps to dispel that notion.)

The costs that can be avoided as a result of purchasing from the outside
are relevant in a make-or-buy decision. The analysis is:
Per Unit
Differential
Costs 20,000 Units
Make Buy Make Buy
Cost of purchasing ....................... $23.50 $470,000
Cost of making:
Direct materials ......................... $ 4.80 $ 96,000
Direct labor ............................... 7.00 140,000
Variable manufacturing overhead 3.20 64,000
Fixed manufacturing overhead ... 4.00 * 80,000
Total cost .................................. $19.00 $23.50 $380,000 $470,000
* The remaining $6 of fixed manufacturing overhead cost would

not be relevant because it will continue regardless of whether
the company makes or buys the parts.
The $150,000 rental value of the space being used to produce part R-3 is
an opportunity cost of continuing to produce the part internally. Thus, the
complete analysis is:
Make Buy
Total cost, as above ........................................... $380,000 $470,000
Rental value of the space (opportunity cost) ........ 150,000
Total cost, including opportunity cost .................. $530,000 $470,000
Net advantage in favor of buying ........................ $60,000
Profits would increase by $60,000 if the outside supplier’s offer is accepted.

1. A B C
(1) Contribution margin per unit ................................. $18 $36 $20
(2) Direct labor cost per unit ...................................... $12 $32 $16
(3) Direct labor rate per hour ..................................... 8 8 8
(4) Direct labor-hours required per unit (2) ÷ (3) ........ 1.5 4.0 2.0
Contribution margin per direct labor-hour (1) ÷ (4) $12 $ 9 $10
2. The company should concentrate its labor time on producing product A:

A B C
Contribution margin per direct labor-hour .. $12 $9 $10
Direct labor-hours available ....................... × 3,000 × 3,000 × 3,000
Total contribution margin .......................... $36,000 $27,000 $30,000
Although product A has the lowest contribution margin per unit and the
second lowest contribution margin ratio, it has the highest contribution
margin per direct labor-hour. Since labor time seems to be the
company’s constraint, this measure should guide management in its
production decisions.
3. The amount Banner Company should be willing to pay in overtime

wages for additional direct labor time depends on how the time would
be used. If there are unfilled orders for all of the products, Banner
would presumably use the additional time to make more of product A.
Each hour of direct labor time generates $12 of contribution margin over
and above the usual direct labor cost. Therefore, Banner should be
willing to pay up to $20 per hour (the $8 usual wage plus the
contribution margin per hour of $12) for additional labor time, but would
of course prefer to pay far less. The upper limit of $20 per direct labor
hour signals to managers how valuable additional labor hours are to the
company.

If all the demand for product A has been satisfied, Banner Company
would then use any additional direct labor-hours to manufacture product
C. In that case, the company should be willing to pay up to $18 per
hour (the $8 usual wage plus the $10 contribution margin per hour for
product C) to manufacture more product C.
Likewise, if all the demand for both products A and C has been satisfied,
additional labor hours would be used to make product B. In that case,
the company should be willing to pay up to $17 per hour to manufacture
more product B.

1. Monthly profits would increase by $9,000:
Total for
Per Unit 2,000 Units
Incremental revenue ....................................... $12.00 $24,000
Incremental costs:
Variable costs:
Direct materials ......................................... 2.50 5,000
Direct labor ............................................... 3.00 6,000
Variable manufacturing overhead ............... 0.50 1,000
Variable selling and administrative .............. 1.50 3,000
Total variable cost ........................................ $ 7.50 15,000
Fixed costs:
None affected by the special order ............. 0
Total incremental cost ..................................... 15,000
Incremental net operating income ................... $ 9,000
2. The relevant cost is $1.50 (the variable selling and administrative costs).
All other variable costs are sunk because the units have already been
produced. The fixed costs are not relevant because they would not be
affected by the sale of leftover units.

Contribution margin lost if the Bath Department is dropped:

Lost from the Bath Department ....................................... $700,000
Lost from the Kitchen Department (10% × $2,400,000) ... 240,000
Total lost contribution margin ............................................ 940,000
Less avoidable fixed costs ($900,000 – $370,000) .............. 530,000
Decrease in overall net operating income ........................... $410,000

Relevant Costs
Item Make Buy
Direct materials (60,000 @ $4.00) ............. $240,000
Direct labor (60,000 @ $2.75) ................... 165,000
Variable manufacturing overhead
(60,000 @ $0.50) ................................... 30,000
Fixed manufacturing overhead, traceable
(1/3 of $180,000)................................... 60,000
Cost of purchasing from outside supplier
(60,000 @ $10) ..................................... $600,000
Total cost ................................................. $495,000 $600,000
The two-thirds of the traceable fixed manufacturing overhead costs that

cannot be eliminated, and all of the common fixed manufacturing overhead
costs, are irrelevant.
The company would save $105,000 per year by continuing to make the
parts itself. In other words, profits would decline by $105,000 per year if
the parts were purchased from the outside supplier.

1. The relevant costs of a fishing trip would be:
Fuel and upkeep on boat per trip..... $25
Junk food consumed during trip*..... 8
Snagged fishing lures...................... 7
Total .............................................. $40
* The junk food consumed during the trip may not be completely
relevant. Even if Steve were not going on the trip, he would still
have to eat. The amount by which the cost of the junk food
exceeds the cost of the food he would otherwise consume
would be the relevant amount.
The other costs are sunk at the point at which the decision is made to
go on another fishing trip.
2. If he fishes for the same amount of time as he did on his last trip, all of
his costs are likely to be about the same as they were on his last trip.
Therefore, it really doesn’t cost him anything to catch the last fish. The
costs are really incurred in order to be able to catch fish and would be
the same whether one, two, three, or a dozen fish were actually caught.
Fishing, not catching fish, costs money. All of the costs are basically
fixed with respect to how many fish are actually caught during any one
fishing trip, except possibly the cost of snagged lures.
3. In a decision of whether to give up fishing altogether, nearly all of the

costs listed by Steve’s wife are relevant. If he did not fish, he would not
need to pay for boat storage, new fishing gear, a fishing license, fuel
and upkeep, junk food, or snagged lures. In addition, he would be able
to sell his boat, the proceeds of which would be considered relevant in
this decision. The original cost of the boat, which is a sunk cost, would
not be relevant.

These three requirements illustrate the slippery nature of costs. A cost
that is relevant in one situation can be irrelevant in the next. None of
the costs are relevant when we compute the cost of catching a
particular fish; some of them are relevant when we compute the cost of
a fishing trip; and nearly all of them are relevant when we consider the
cost of not giving up fishing. What is even more confusing is that Wendy
is correct; the average cost of a salmon is $167, even though the cost of
actually catching any one fish is essentially zero. It may not make sense
from an economic standpoint to have salmon fishing as a hobby, but as
long as Steve is out in the boat fishing, he might as well catch as many
fish as he can.

Problem 7-18 (30 minutes)
1. Contribution margin lost if the tour is discontinued .. $(2,100)

Less tour costs that can be avoided if the tour is
discontinued:
Tour promotion ................................................ $600
Fee, tour guide ................................................ 700
Fuel for bus ..................................................... 125
Overnight parking fee, bus................................ 50
Room & meals, bus driver and tour guide .......... 175 1,650
Net decrease in profits if the tour is discontinued .... $ (450)
The following costs are not relevant to the decision:

Cost Reason
Salary of bus driver The drivers are all on salary and there
would be no change in the number of
drivers on the payroll.
Depreciation of bus Depreciation due to wear and tear is
negligible and there would be no
change in the number of buses in the
fleet.
Liability insurance, bus There would be no change in the
number of buses in the fleet.
Bus maintenance & preparation There would be no change in the size
of the maintenance & preparation staff.

Problem 7-18 (continued)
Alternative Solution:
Difference:
Net
Operating
Keep Income
the Drop Increase or
Tour the Tour (Decrease)
Ticket revenue ................................. $3,000 $ 0 $(3,000)

Less variable expenses ..................... 900 0 900
Contribution margin.......................... 2,100 0 (2,100)
Less tour expenses:
Tour promotion .............................. 600 0 600
Salary of bus driver ........................ 350 350 0
Fee, tour guide .............................. 700 0 700
Fuel for bus ................................... 125 0 125
Depreciation of bus ........................ 450 450 0
Liability insurance, bus ................... 200 200 0
Overnight parking fee, bus ............. 50 0 50
Room & meals, bus driver and tour
guide.......................................... 175 0 175
Bus maintenance and preparation ... 300 300 0
Total tour expenses .......................... 2,950 1,300 1,650
Net operating loss ............................ $ (850) $(1,300) $ (450)
2. The goal of increasing average seat occupancy could be accomplished

by dropping tours like the Historic Mansions tour with lower-than-
average seat occupancies. This could reduce profits in at least two ways.
First, the tours that are eliminated could have contribution margins that
exceed their avoidable costs (such as in the case of the “Historic
Mansions” tour in part 1). If so, then eliminating these tours would
reduce the company’s total contribution margin more than it would
reduce total costs, and profits would decline. Second, these tours might
be acting as “magnets” that draw tourists to other, more profitable
tours.

1. Per 16-Ounce
T-Bone
Revenue from further processing:
Selling price of one filet mignon (6 ounces × $3.60
per pound/16 ounces per pound) .......................... $1.35
Selling price of one New York cut (8 ounces × $2.90
per pound/16 ounces per pound) .......................... 1.45
Total revenue from further processing ........................ 2.80
Less revenue from one T-bone steak .......................... 2.25
Incremental revenue from further processing .............. 0.55
Less cost of further processing ................................... 0.20
Profit per pound from further processing .................... $0.35
2. The T-bone steaks should be processed further into filet mignon and the
New York cuts. This will yield $0.35 per pound in added profit for the
company. The $0.55 “profit” per pound for T-bone steak mentioned in
the problem statement is not relevant to the decision because it
contains allocated joint costs. The company will incur the allocated joint
costs regardless of whether the T-bone steaks are sold outright or
processed further; thus, this cost should be ignored in the decision.

1. Product MJ-7 has a contribution margin of $14 per gallon ($35 – $21 =
$14). If the plant closes, this contribution margin will be lost on the
22,000 gallons (11,000 gallons per month × 2 = 22,000 gallons) that
could have been sold during the two-month period. However, the
company will be able to avoid some fixed costs as a result of closing
down. The analysis is:
Contribution margin lost by closing the plant for
two months ($14 per gallon × 22,000 gallons) . $(308,000)
Costs avoided by closing the plant for two months:
Fixed manufacturing overhead cost
($60,000 × 2 months = $120,000) ................ $120,000
Fixed selling costs
($310,000 × 10% × 2 months) ..................... 62,000 182,000
Net disadvantage of closing, before start-up
costs .............................................................. (126,000)
Add start-up costs ............................................. (14,000)
Disadvantage of closing the plant ....................... $(140,000)
No, the company should not close the plant; it should continue to
operate at the reduced level of 11,000 gallons produced and sold each
month. Closing will result in a $140,000 greater loss over the two-month
period than if the company continues to operate. Additional factors are
the potential loss of goodwill among the customers who need the
11,000 gallons of MJ-7 each month and the adverse effect on employee
morale. By closing down, the needs of customers will not be met (no
inventories are on hand), and their business may be permanently lost to
another supplier.

Alternative Solution:
Difference—
Net
Operating
Income
Plant Kept Plant Increase
Open Closed (Decrease)
Sales (11,000 gallons × $35 per
gallon × 2) ................................. $ 770,000 $ 0 $(770,000)
Less variable expenses (11,000
gallons × $21 per gallon × 2) ...... 462,000 0 462,000
Contribution margin ....................... 308,000 0 (308,000)
Less fixed costs:
Fixed manufacturing overhead
cost ($230,000 × 2;
$170,000 × 2) ......................... 460,000 340,000 120,000
Fixed selling cost ($310,000 × 2;
$310,000 × 90% × 2) .............. 620,000 558,000 62,000
Total fixed cost .............................. 1,080,000 898,000 182,000
Net operating loss before start-up
costs .......................................... (772,000) (898,000) (126,000)
Start-up costs ................................ (14,000) (14,000)
Net operating loss .......................... $ (772,000) $(912,000) $(140,000)

2. Ignoring the additional factors cited in part (1) above, Hallas Company
should be indifferent between closing down or continuing to operate if
the level of sales drops to 12,000 gallons (6,000 gallons per month)
over the two-month period. The computations are:
Cost avoided by closing the plant for two months
(see above) ........................................................ $182,000
Less start-up costs................................................. 14,000
Net avoidable costs ............................................... $168,000
Net avoidable costs $168,000

=
Contribution margin per gallon $14 per gallon
=12,000 gallons
Verification: Operate at
12,000
Gallons for Close for
Two Months Two Months
Sales (12,000 gallons × $35 per gallon) ....... $ 420,000 $ 0
Less variable expenses (12,000 gallons ×
$21 per gallon) ........................................ 252,000 0
Contribution margin .................................... 168,000 0
Less fixed expenses:
Manufacturing overhead ($230,000 and
$170,000 × 2 months) ........................... 460,000 340,000
Selling ($310,000 and $279,000 × 2
months) ................................................ 620,000 558,000
Total fixed expenses.................................... 1,080,000 898,000
Start-up costs ............................................. 0 14,000
Total costs .................................................. 1,080,000 912,000
Net operating loss ....................................... $ (912,000) $(912,000)

1. Incremental revenue:
Fixed fee (10,000 pairs × €4 per pair) .............. € 40,000
Reimbursement for costs of production:
(Variable production cost of €16 plus fixed
overhead cost of €5 equals €21 per pair;
10,000 pairs × €21 per pair) ......................... 210,000
Total incremental revenue ............................... 250,000
Incremental costs:
Variable production costs (10,000 pairs × €16
per pair) ...................................................... 160,000
Increase in net operating income ....................... € 90,000
2. Sales revenue through regular channels

(10,000 pairs × €32 per pair)* ........................ €320,000
Sales revenue from the army (above) ................. 250,000
Decrease in revenue received............................. 70,000
Less variable selling expenses avoided if the
army’s offer is accepted (10,000 pairs × €2 per
pair) .............................................................. 20,000
Net decrease in net operating income with the
army’s offer .................................................... € 50,000
*This assumes that the sales through regular channels can be recovered
after the special order has been fulfilled. This may not happen if regular
customers who are turned away to fill the special order are permanently
lost to competitors.

1. The fixed overhead costs are common and will remain the same
regardless of whether the cartridges are produced internally or
purchased outside. Hence, they are not relevant. The variable
manufacturing overhead cost per box of pens is $0.30, as shown below:
Total manufacturing overhead cost per box of pens ... $0.80
Less fixed manufacturing overhead ($50,000 ÷
100,000 boxes) ..................................................... 0.50
Variable manufacturing overhead cost per box ........... $0.30
The total variable cost of producing one box of Zippo pens is:
Direct materials ....................................................... $1.50
Direct labor ............................................................. 1.00
Variable manufacturing overhead .............................. 0.30
Total variable cost per box ........................................ $2.80
If the cartridges for the Zippo pens are purchased from the outside
supplier, then the variable cost per box of Zippo pens would be:
Direct materials ($1.50 × 80%) ................................ $1.20
Direct labor ($1.00 × 90%) ...................................... 0.90
Variable manufacturing overhead ($0.30 × 90%) ....... 0.27
Purchase of cartridges .............................................. 0.48
Total variable cost per box ........................................ $2.85
The company should reject the outside supplier’s offer. Producing the
cartridges internally costs $0.05 less per box of pens than purchasing
them from the supplier.
Another approach to the solution is:
Cost avoided by purchasing the cartridges:
Direct materials ($1.50 × 20%).............................. $0.30
Direct labor ($1.00 × 10%).................................... 0.10
Variable manufacturing overhead ($0.30 × 10%) .... 0.03
Total costs avoided ................................................ $0.43
Cost of purchasing the cartridges .............................. $0.48
Cost savings per box by making cartridges internally .. $0.05
Note that the avoidable cost of $0.43 above represents the cost of
making one box of cartridges internally.

2. The company would not want to pay any more than $0.43 per box
because it can make the cartridges for this amount internally.
3. The company has three alternatives for obtaining the necessary

cartridges. It can:
#1 Produce all cartridges internally.
#2 Purchase all cartridges externally.
#3 Produce the cartridges for 100,000 boxes internally and purchase
the cartridges for 50,000 boxes externally.
The costs under the three alternatives are:

Alternative #1—Produce all cartridges internally:
Variable costs (150,000 boxes × $0.43 per box) .......... $64,500
Fixed costs of adding capacity .................................... 30,000
Total cost .................................................................. $94,500
Alternative #2—Purchase all cartridges externally:
Variable costs (150,000 boxes × $0.48 per box) ............ $72,000
Alternative #3—Produce 100,000 boxes internally, and
purchase 50,000 boxes externally:
Variable costs:
100,000 boxes × $0.43 per box.............................. $43,000
50,000 boxes × $0.48 per box ............................... 24,000
Total cost .................................................................. $67,000

Or, in terms of total cost per box of pens, the answer would be:
Alternative #1—Produce all cartridges internally:
Fixed costs of adding capacity .................................... 30,000
Total cost .................................................................. $450,000
Alternative #2—Purchase all cartridges externally:
Alternative #3—Produce the cartridges for 100,000
boxes internally, and purchase the cartridges for
50,000 boxes externally:
Variable costs:
100,000 boxes × $2.80 per box ............................ $280,000
50,000 boxes × $2.85 per box .............................. 142,500
Total cost ................................................................ $422,500
Thus, the company should accept the outside supplier’s offer, but only
for the cartridges for 50,000 boxes.
4. In addition to cost considerations, Bronson should take into account the

following factors:
a) The ability of the supplier to meet required delivery schedules.
b) The quality of the cartridges purchased from the supplier.
c) Alternative uses of the capacity that is used to make the cartridges.
d) The ability of the supplier to supply cartridges if volume increases in
future years.
e) The problem of alternative sources of supply if the supplier proves
undependable.

1. The simplest approach to the solution is:
Gross margin lost if the store is closed ....... $(228,000)
Less costs that can be avoided:
Direct advertising ................................... $36,000
Sales salaries ......................................... 45,000
Delivery salaries..................................... 7,000
Store rent .............................................. 65,000
Store management salaries (new
employee would not be hired to fill
vacant position at another store) .......... 15,000
General office salaries ............................ 8,000
Utilities .................................................. 27,200
Insurance on inventories (2/3 × $9,000) . 6,000
Employment taxes*................................ 9,000 218,200
Decrease in company net operating income
if the Downtown Store is closed .............. $ (9,800)
*Salaries avoided by closing the store:

Sales salaries ....................................................... $45,000
Delivery salaries ................................................... 7,000
Store management salaries ................................... 15,000
General office salaries ........................................... 8,000
Total salaries ........................................................ 75,000
Employment tax rate ............................................ × 12%
Employment taxes avoided.................................... $ 9,000
2. The Downtown Store should not be closed. If the store is closed, overall
company net operating income will decrease by $9,800 per quarter.

3. The Downtown Store should be closed if $200,000 of its sales are picked
up by the Uptown Store. The net effect of the closure will be an increase
in overall company net operating income by $76,200 per quarter:
Gross margin lost if the Downtown Store is closed .............. $(228,000)
Gross margin gained at the Uptown Store:
$200,000 × 43% ........................................................... 86,000
Net loss in gross margin.................................................... (142,000)
Costs that can be avoided if the Downtown Store is closed
(part 1) ......................................................................... 218,200
Net advantage of closing the Downtown Store ................... $ 76,200

1. Selling price per unit ....................... $40

Variable expenses per unit* ............ 24
Contribution margin per unit ........... $16
*$9.50 + $10.00 + $2.80 + $1.70 = $24.00

Increased unit sales (80,000 × 25%).................... 20,000
Contribution margin per unit ................................ × $16
Incremental contribution margin........................... $320,000
Less added fixed selling expense .......................... 150,000
Incremental net operating income ........................ $170,000
Yes, the increase in fixed selling expense would be justified.
2. Variable production cost per unit .......................... $22.30

Import duties, etc. ($14,000 ÷ 20,000 units) ........ 0.70
Shipping cost per unit .......................................... 1.50
Break-even price per unit ..................................... $24.50
3. If the plant operates at 25% of normal levels, then only 5,000 units will
be produced and sold during the three-month period:
80,000 units per year × 3/12 = 20,000 units.
20,000 units × 25% = 5,000 units produced and sold.
Given this information, the simplest approach to the solution is:
Contribution margin lost if the plant is closed
(5,000 units × $16 per unit*) ........................ $(80,000)
Fixed costs that can be avoided if the plant is closed:
Fixed manufacturing overhead cost
($400,000 × 3/12 = $100,000;
$100,000 × 40%) ................................... $40,000
Fixed selling cost ($360,000 × 3/12 =
$90,000; $90,000 × 1/3).......................... 30,000 70,000
Net disadvantage of closing the plant ............... $(10,000)
*$40.00 – ($9.50 + $10.00 + $2.80 + $1.70) = $16.00

Profits would decline by $10,000 if the plant is closed.

Alternative approach:
Keep the Close the
Plant Open Plant
Sales (5,000 units × $40 per unit) ......... $ 200,000 $ 0
Variable expenses
(5,000 units × $24 per unit) ............... 120,000 0
Contribution margin .............................. 80,000 0
Fixed expenses:
Fixed manufacturing overhead cost:
$400,000 × 3/12 ............................. 100,000
$400,000 × 3/12 × 60% ................. 60,000
Fixed selling expense:
$360,000 × 3/12 ............................. 90,000
$360,000 × 3/12 × 2/3 ................... 60,000
Total fixed expenses ............................. 190,000 120,000
Net operating income (loss) .................. $(110,000) $(120,000)
4. The relevant cost is $1.70 per unit, which is the variable selling expense
per Zet. Since the blemished units have already been produced, all
production costs (including the variable production costs) are sunk. The
fixed selling expenses are not relevant since they will remain the same
regardless of whether or not the blemished units are sold. The variable
selling expense may or may not be relevant—depending on how the
blemished units are sold. For example, the units may be sold through a
liquidator without incurring the normal variable selling expense.
5. The costs that can be avoided by purchasing from the outside supplier are
relevant. These costs are:
Variable production costs .............................................. $22.30
Fixed manufacturing overhead cost ($400,000 × 70% =
$280,000; $280,000 ÷ 80,000 units) ........................... 3.50
Variable selling expense ($1.70 × 60%) ......................... 1.02
Total avoidable cost ...................................................... $26.82
To be acceptable, the outside manufacturer’s quotation must be less

than $26.82 per unit.

1. The $2.00 per unit general overhead cost is not relevant to the decision
because the total general company overhead cost will be the same
regardless of whether the company decides to make or buy the
subassemblies. Also, the depreciation on the old equipment is not a
relevant cost because it represents a sunk cost and the old equipment is
worn out and must be replaced. The cost of supervision is relevant
because this cost can be avoided by buying the subassemblies.
Total Differential
Differential Costs for
Costs Per Unit 40,000 Units
Make Buy Make Buy
Outside supplier’s price ........ $8.00 $320,000
Direct materials ................... $2.75 $110,000
Direct labor ($4.00 × 0.75) .. 3.00 120,000
Variable overhead
($0.60 × 0.75) ................ 0.45 18,000
Supervision ......................... 0.75 30,000
Equipment rental* ............... 1.50 60,000
Total ................................... $8.45 $8.00 $338,000 $320,000
Difference in favor of buying ...........................................
$0.45 $18,000
* $60,000 per year ÷ 40,000 units per year = $1.50 per unit

2. a. Note that unit costs for both supervision and equipment rental will
change if the company needs 50,000 subassemblies each year. These
fixed costs will be spread over a larger number of units, thereby
decreasing the cost per unit.
Differential Total Differential
Costs Per Unit Costs—50,000 Units
Make Buy Make Buy
Outside supplier’s price .......... $8.00 $400,000
Direct materials ..................... $2.75 $137,500
Direct labor ........................... 3.00 150,000
Variable overhead.................. 0.45 22,500
Supervision
($30,000 ÷ 50,000 units) .... 0.60 30,000
Equipment rental
($60,000 ÷ 50,000 units) .... 1.20 60,000
Total ..................................... $8.00 $8.00 $400,000 $400,000
Difference ............................. $0 $0
The company would be indifferent between the two alternatives if

50,000 subassemblies were needed each year.

b. Again, notice that the unit costs for both supervision and equipment
rental decrease with the greater volume of units.
Differential
Costs Per Total Differential
Unit Costs—60,000 Units
Make Buy Make Buy
Outside supplier’s price.......... $8.00 $480,000
Direct materials..................... $2.75 $165,000
Direct labor........................... 3.00 180,000
Variable overhead ................. 0.45 27,000
Supervision
($30,000 ÷ 60,000 units) .... 0.50 30,000
Equipment rental
($60,000 ÷ 60,000 units) .... 1.00 60,000
Total .................................... $7.70 $8.00 $462,000 $480,000
Difference in favor of making ..........................................
$0.30 $18,000
The company should rent the new equipment and make the
subassemblies if 60,000 units per year are needed.

3. Other factors that the company should consider include:
a. Will volume in future years increase, or will it remain constant at
40,000 units per year? (If volume increases, then renting the new
equipment becomes more desirable, as shown in the computations
above.)
b. Can quality control be maintained if the subassemblies are purchased
from the outside supplier?
c. Does the company have some other profitable use for the space now
being used to produce the subassemblies? Does production of the
subassemblies require use of a constrained resource?
d. Will the outside supplier dependably meet shipping schedules?
e. Can the company begin making the subassemblies again if the
supplier proves to be undependable? Are there alternative suppliers?
f. If the outside supplier’s offer is accepted and the need for
subassemblies increases in future years, will the supplier have the
capacity to provide more than 40,000 subassemblies per year?
g. Will the rental cost of the equipment change in the future?

1. Only the avoidable costs are relevant in a decision to drop the Model C3
lawnchair product. The avoidable costs are:
Direct materials..................................................... R122,000
Direct labor........................................................... 72,000
Fringe benefits (20% of direct labor) ...................... 14,400
Variable manufacturing overhead ........................... 3,600
Product manager’s salary ....................................... 10,000
Sales commissions (5% of sales) ........................... 15,000
Fringe benefits (20% of salaries and commissions) . 5,000
Shipping ............................................................... 10,000
Total avoidable cost............................................... R252,000
The following costs are not relevant in this decision:
Cost Reason not relevant
Building rent and maintenance All products use the same
facilities; no space would be
freed if a product were
dropped.
Depreciation All products use the same
equipment so no equipment
can be sold. Furthermore, the
equipment does not wear out
through use.
General administrative expenses Dropping the Model C3
lawnchair would have no effect
on total general administrative
expenses.
Having determined the costs that can be avoided if the Model C3

lawnchair is dropped, we can now make the following computation:
Sales revenue lost if the Model C3 lawnchair is dropped .. R300,000
Less costs that can be avoided (see above) .................... 252,000
Decrease in overall company net operating income if
the Model C3 lawnchair is dropped .............................. R 48,000

Thus, the Model C3 lawnchair should not be dropped unless the
company can find more profitable uses for the resources consumed by
the Model C3 lawnchair.
2. To determine the minimum acceptable level of sales, we must first

classify the avoidable costs into variable and fixed costs as follows:
Variable Fixed
Direct materials ................................................ R122,000
Direct labor ...................................................... 72,000
Fringe benefits (20% of direct labor) ................. 14,400
Variable manufacturing overhead ...................... 3,600
Product managers’ salaries................................ R10,000
Sales commissions (5% of sales) ....................... 15,000
Fringe benefits
(20% of salaries and commissions) ................. 3,000 2,000
Shipping .......................................................... 10,000
Total costs ....................................................... R240,000 R12,000
The Model C3 lawnchair should be retained as long as its contribution
margin covers its avoidable fixed costs. Break-even analysis can be used
to find the sales volume where the contribution margin just equals the
avoidable fixed costs.
The contribution margin ratio is computed as follows:
Contribution margin
CM ratio =
Sales
R300,000-R240,000
= = 20%
R300,000

The break-even sales volume can be found using the break-even
formula:
Fixed costs
Break-even point =
CM ratio
R12,000
= = R60,000
0.20
Therefore, as long as the sales revenue from the Model C3 lawnchair
exceeds R60,000, it is covering its own avoidable fixed costs and is
contributing toward covering the common fixed costs and toward the
profits of the entire company.

1. Sewing
Marcy Tina Cari Lenny Kit
Direct labor cost per unit .. $ 4.80 $ 3.00 $ 8.40 $ 6.00 $ 2.40
Direct labor-hours per
unit* (a) ....................... 0.40 0.25 0.70 0.50 0.20
Selling price ..................... $35.00 $24.00 $22.00 $18.00 $14.00
Variable costs:
Direct materials ............. 3.50 2.30 4.50 3.10 1.50
Direct labor ................... 4.80 3.00 8.40 6.00 2.40
Variable overhead .......... 1.60 1.00 2.80 2.00 0.80
Total variable costs ........... 9.90 6.30 15.70 11.10 4.70
Contribution margin (b) .... $25.10 $17.70 $ 6.30 $ 6.90 $ 9.30
Contribution margin per
DLH (b) ÷ (a) ................ $62.75 $70.80 $ 9.00 $13.80 $46.50
* Direct labor cost per unit ÷ $12.00 per direct labor-hour
2. Estimated
DLH Sales Total
Product Per Unit (units) DLHs
Marcy ......................... 0.40 26,000 10,400
Tina ........................... 0.25 42,000 10,500
Cari ............................ 0.70 40,000 28,000
Lenny ......................... 0.50 46,000 23,000
Sewing Kit .................. 0.20 450,000 90,000
Total DLHs required ..... 161,900
3. Because the Cari doll has the lowest contribution margin per labor hour,
its production should be reduced by 17,000 dolls (11,900 excess DLHs ÷
0.70 DLH per doll = 17,000 dolls). Thus, production and sales of the Cari
doll will be reduced to 23,000 dolls for the year.

4. Because the additional capacity would be used to produce the Cari doll,
the company should be willing to pay up to $21.00 per DLH ($12.00
usual labor rate plus $9.00 contribution margin per DLH) for added labor
time. Thus, the company could employ workers for overtime at the
usual time-and-a-half rate of $18.00 per hour ($12.00 × 1.5 = $18.00)
and still improve overall profit.
5. Additional output could be obtained in a number of ways including

working overtime, adding another shift, expanding the workforce,
contracting out some work to outside suppliers, and eliminating wasted
labor time in the production process. The first four methods are costly,
but the last method can add capacity at very low cost.
Technical note: Some would argue that direct labor is a fixed cost in this
situation and should be excluded when computing the contribution
margin per unit. However, when deciding which products to emphasize,
no harm is done by misclassifying a fixed cost as a variable cost—
providing that the fixed cost is the constraint. If direct labor were
removed from the variable cost category, the net effect would be to
bump up the contribution margin per direct labor-hour by $12.00 for
each of the products. The products will be ranked exactly the same—in
terms of the contribution margin per unit of the constrained resource—
whether direct labor is considered variable or fixed. However, if labor is
fixed and is not the constraint, including labor cost in the calculation of
the contribution margin may lead to incorrect rankings of the products.

1. A product should be processed further if the incremental revenue from
the further processing exceeds the incremental costs. The incremental
revenue from further processing of the honey is:
Selling price of a container of honey drop candies ... $4.40
Selling price of three-quarters of a pound of honey
($3.00 × 3/4) ..................................................... 2.25
Incremental revenue per container ......................... $2.15
The incremental variable costs are:

Decorative container .............................................. $0.40
Other ingredients .................................................. 0.25
Direct labor ........................................................... 0.20
Variable manufacturing overhead ........................... 0.10
Commissions (5% × $4.40) ................................... 0.22
Incremental variable cost per container .................. $1.17
Therefore, the incremental contribution margin is $0.98 per container

($2.15 – $1.17). The cost of purchasing the honeycombs is not relevant
because those costs are incurred regardless of whether the honey is
sold outright or processed further into candies.
2. The only avoidable fixed costs of the honey drop candies are the master
candy maker’s salary and the fixed portion of the salesperson’s
compensation. Therefore, the number of containers of the candy that
must be sold each month to justify continued processing of the honey
into candies is determined as follows:
Master candy maker’s salary ................. $3,880
Salesperson’s fixed compensation .......... 2,000
Avoidable fixed costs ............................ $5,880
Avoidable fixed costs $5,880

= =6,000 containers
Incremental CM per container $0.98 per container

If the company can sell more than 6,000 containers of the candies each
month, then profits will be higher than if the honey were simply sold
outright. If the company cannot sell at least 6,000 containers of the
candies each month, then profits will be higher if the company
discontinues making honey drop candies. To verify this, we show below
the total contribution to profits of sales of 5,000, 6,000, and 7,000
containers of candies, contrasted to sales of equivalent amounts of
honey. For example, instead of selling 4,500 pounds of honey, this same
amount of honey can be processed into 6,000 containers of candy.
Sales of candies:
Containers sold per month .................. 5,000 6,000 7,000
Sales revenue @ $4.40 per container ... $22,000 $26,400 $30,800
Less incremental variable costs @
$1.17 per container .......................... 5,850 7,020 8,190
Incremental contribution margin .......... 16,150 19,380 22,610
Less avoidable fixed costs ................... 5,880 5,880 5,880
Total contribution to profits ................. $10,270 $13,500 $16,730
Sales of equivalent amount of honey:
Pounds sold per month* ..................... 3,750 4,500 5,250
Sales revenue @ $3.00 per pound ....... $11,250 $13,500 $15,750
* 5,000 containers × 3/4 pounds per container = 3,750 pounds

6,000 containers × 3/4 pounds per container = 4,500 pounds
7,000 containers × 3/4 pounds per container = 5,250 pounds
If there is a choice between selling 3,750 pounds of honey or selling
5,000 containers of candies, profits would be higher selling the honey
outright ($11,250 versus $10,270). The company should be indifferent
between selling 4,500 pounds of honey or 6,000 containers of candy. In
either case, the contribution to profits would be $13,500. On the other
hand, if faced with a choice of selling 5,250 pounds of honey or 7,000
containers of candies, profits would be higher processing the honey into
candies ($16,730 versus $15,750).

Case 7-29 (120 minutes)
1. The product margins computed by the accounting department for the
drums and mountain bike frames should not be used in the decision of
which product to make. The product margins are lower than they should
be due to the presence of allocated fixed common costs that are
irrelevant in this decision. Moreover, even after the irrelevant costs have
been removed, what matters is the profitability of the two products in
relation to the amount of the constrained resource—welding time—that
they use. A product with a very low margin may be desirable if it uses
very little of the constrained resource. In short, the financial data
provided by the accounting department are pretty much useless for
making this decision.
2. Students may have answered this question assuming that direct labor is
a variable cost, even though the case strongly hints that direct labor is a
fixed cost. The solution is shown here assuming that direct labor is
fixed. The solution assuming that direct labor is variable will be shown in
part (4).
Solution assuming direct labor is fixed

Manufactured
Mountain
Purchased XSX Bike
XSX Drums Drums Frames
Selling price ................................... $154.00 $154.00 $65.00
Variable costs:
Direct materials ........................... 120.00 44.50 17.50
Variable manufacturing overhead .. 0.00 1.05 0.60
Variable selling and administrative 0.85 0.85 0.40
Total variable cost .......................... 120.85 46.40 18.50
Contribution margin........................ $ 33.15 $107.60 $46.50

Case 7-29 (continued)
3. Because the demand for the welding machine exceeds the 2,000 hours
that are available, products that use the machine should be prioritized
based on their contribution margin per welding hour. The computations
are carried out below under the assumption that direct labor is a fixed
cost and then under the assumption that it is a variable cost.
Solution assuming direct labor is fixed

Manufactured
Mountain
XSX Bike
Drums Frames
Contribution margin per unit (from part 2) (a)... $107.60 $46.50
Welding hours per unit (b) ............................... 0.8 hour 0.2 hour
Contribution margin per welding hour (a) ÷ (b) $134.50 $232.50
per hour per hour

Because the contribution margin per unit of the constrained resource (i.e., welding time) is larger for the
mountain bike frames than for the XSX drums, the frames make the most profitable use of the welding
machine. Consequently, the company should manufacture as many mountain bike frames as possible up
to demand and then use any leftover capacity to produce XSX drums. Buying the drums from the
outside supplier can fill any remaining unsatisfied demand for XSX drums. The necessary calculations
are carried out below.
Analysis assuming direct labor is a fixed cost

(a) (b) (c) (a) × (c) (a) × (b)
Unit Balance
Contri- Welding Total of Total
bution Time Welding Welding Contri-
Quantity Margin per Unit Time Time bution
Total hours available ................... 2,000
Mountain bike frames produced .. 3,500 $ 46.50 0.20 700 1,300 $162,750
XSX Drums—make ..................... 1,625 107.60 0.80 1,300 0 174,850
XSX Drums—buy ........................ 1,375 33.15 45,581
Total contribution margin ............ 383,181
Less: Contribution margin from
present operations: 2,500
drums × $107.60 CM per drum. 269,000
Increased contribution margin
and net operating income ........ $114,181

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,
duplicated, forwarded, distributed, or posted on a website, in whole or part.
4. The computation of the contribution margins and the analysis of the
best product mix are repeated here under the assumption that direct
labor costs are variable.
Solution assuming direct labor is a variable cost

Manufactured
Mountain
Purchased XSX Bike
XSX Drums Drums Frames
Selling price ..................................... $154.00 $154.00 $65.00
Variable costs:
Direct materials ............................. 120.00 44.50 17.50
Direct labor ................................... 0.00 4.50 22.50
Variable manufacturing overhead .... 0.00 1.05 0.60
Variable selling and administrative .. 0.85 0.85 0.40
Total variable cost ............................ 120.85 50.90 41.00
Contribution margin.......................... $ 33.15 $103.10 $24.00

Manufactured
Mountain
XSX Bike
Drums Frames
Contribution margin per unit (above) (a) ............ $103.10 $24.00
Welding hours per unit (b) ................................. 0.8 hour 0.2 hour
Contribution margin per welding hour (a) ÷ (b) .. $128.88 $120.00
per hour per hour
When direct labor is assumed to be a variable cost, the conclusion is
reversed from the case in which direct labor is assumed to be a fixed
cost—the XSX drums appear to be a better use of the constraint than
the mountain bike frames. The assumption about the behavior of direct
labor really does matter.

(a) (b) (c) (a) × (c) (a) × (b)
Unit Balance
Contri- Welding Total of Total
bution Time Welding Welding Contri-
Quantity Margin per Unit Time Time bution
Total hours available .................... 2,000
XSX Drums—make ...................... 2,500 $103.10 0.80 2,000 0 $257,750
Mountain bike frames produced ... 0 24.00 0.20 0 0 0
XSX Drums—buy ......................... 500 33.15 16,575
Total contribution margin ............. 274,325
Less: Contribution margin from
present operations: 2,500
drums × $103.10 CM per drum . 257,750
Increased contribution margin
and net operating income ......... $ 16,575

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,
duplicated, forwarded, distributed, or posted on a website, in whole or part.
5. The case strongly suggests that direct labor is fixed: “The mountain bike
frames could be produced with existing equipment and personnel.”
Nevertheless, it would be a good idea to examine how much labor time
is really needed under the two opposing plans.
Direct Labor- Total Direct

Production Hours Per Unit Labor-Hours
Plan 1:
Mountain bike frames .. 3,500 1.25* 4,375
XSX drums .................. 1,625 0.25** 406
4,781
Plan 2:
XSX drums .................. 2,500 0.25** 625
* $22.50 ÷ $18.00 per hour = 1.25 hours

** $4.50 ÷ $18.00 per hour = 0.25 hour
Some caution is advised. Plan 1 assumes that direct labor is a fixed cost.
However, this plan requires over 4,000 more direct labor-hours than Plan
2 and the present situation. A full-time employee works about 1,900
hours a year, so the added workload is about equivalent to two full-time
employees. Does the plant really have that much idle time at present? If
so, and if shifting workers over to making mountain bike frames would
not jeopardize operations elsewhere, then Plan 1 is indeed the better
plan. However, if taking on the mountain bike frame as a new product
would lead to pressure to hire two more workers, more analysis is in
order. It is still best to view direct labor as a fixed cost, but taking on the
frames as a new product would lead to a jump in fixed costs of about
$68,400 (1,900 hours × $18 per hour × 2). This must be covered by the
additional contribution margin or the plan should be rejected. See the
additional analysis on the next page.

Contribution margin from Plan 1:

Mountain bike frames produced (3,500 × $46.50) ...... $162,750
XSX Drums—make (1,625 × $107.60)........................ 174,850
XSX Drums—buy (1,375 × $33.15) ............................ 45,581
Total contribution margin .......................................... 383,181
Less: Additional fixed labor costs ................................. 68,400
Net effect of Plan 1 on net operating income ................ $314,781
Contribution margin from Plan 2: .................................
XSX Drums—make (2,500 × $107.60)........................ $269,000
XSX Drums—buy (500 × $33.15)............................... 16,575
Net effect of Plan 2 on net operating income ................ $285,575
Net advantage of Plan 1 .............................................. $ 29,206
Plan 1, introducing the new product, would still be optimal even if two
more direct labor employees would have to be hired. The reason for this
is subtle. If the company does not make the XSX drums itself, it can still
buy them. Thus, using an hour of welding time to make the mountain
bike frames does not mean giving up a contribution margin of $128.88
on drums (assuming direct labor is a variable cost). The opportunity cost
of using the welding machine to produce mountain bike frames is less
than this since a purchased drum can replace a manufactured drum. An
amended analysis using the opportunity cost concept appears on the
next page.

Amended solution assuming direct labor is fixed
Manufactured
Mountain
XSX Bike
Drums Frames
Contribution margin per unit (from part 2) (a)..... $74.45* $46.50
per hour per hour
Amended solution assuming direct labor is a variable cost

Manufactured
Mountain
XSX Bike
Drums Frames
Contribution margin per unit (from part 2) (a)..... $69.95* $24.00
per hour per hour
* Net of the $33.15 contribution margin of a purchased drum. If the
company does not make a drum, it can purchase one, so the lost
contribution from making bike frames rather than drums is less than
it otherwise would be.
With this amended approach, assuming direct labor is variable points to

the same solution as when direct labor is assumed to be fixed—place
the highest priority on making mountain bike frames. This won’t always
happen.

1. Continuing to obtain covers from its own Greenville Cover Plant would
allow Mobile Seating Corporation to maintain its current level of control
over the quality of the covers and the timing of their delivery. Keeping
the Greenville Cover Plant open also allows Mobile Seating Corporation
more flexibility than purchasing the coverings from outside suppliers.
Mobile Seating Corporation could more easily alter the coverings’ design
and change the quantities produced, especially if long-term contracts
are required with outside suppliers. Mobile Seating Corporation should
also consider the economic impact that closing Greenville Cover will
have on the community and how this might affect Mobile Seating
Corporation’s other operations in the region.
2. a. The following costs can be avoided by closing the plant, and

therefore are relevant to the decision:
Materials ................................... $ 8,000,000
Labor:
Direct ..................................... $6,700,000
Supervision ............................. 400,000
Indirect plant .......................... 1,900,000 9,000,000
Differential pension expense
($1,600,000 – $700,000) ......... 900,000
Total annual relevant costs ......... $17,900,000
b. The following costs can’t be avoided by closing the plant, and

therefore are not relevant to the decision:
Depreciation—equipment ................................ $1,300,000
Depreciation—building .................................... 2,100,000
Continuing pension cost .................................. 700,000
Plant manager and staff .................................. 600,000
Corporate expenses 1,700,000
Total annual continuing costs........................... $6,400,000

Depreciation is not relevant to the decision because it is a sunk cost.
Moreover, whether the plant is closed or continues to operate, all of
the remaining book value of the equipment and buildings will
eventually be written off. A total of $700,000 of the annual pension
expense is not relevant because it would continue whether or not the
plant is closed. The amount for plant manager and staff is not
relevant because Restin and her staff would continue with Mobile
Seating Corporation and administer the three remaining plants. The
corporate allocation is not relevant because it represents allocated
fixed costs incurred outside the Greenville Cover Plant that
presumably would not change if the plant were closed.
c. The following nonrecurring costs would arise in the year that the
plant is closed, but would not be incurred in any other year:
Termination charges on canceled material orders
($8,000,000 × 25%) ............................................ $2,000,000
Employment assistance ........................................... 800,000
Total nonrecurring costs .......................................... $2,800,000
These two costs are relevant to the decision because they will be
incurred only if the plant is closed. The $2,000,000 salvage value of
the equipment and buildings offsets these costs.
3. No, the plant should not be closed. The computations are:

First Year Other Years
Cost of purchasing the covers outside ... $(21,000,000) $(21,000,000)
Annual costs avoided by closing the
plant (Part 2a) ................................... 17,900,000 17,900,000
Cost of closing the plant (first year non-
recurring costs) ................................. (2,800,000)
Salvage value of buildings and
equipment......................................... 2,000,000
Net advantage (disadvantage) of closing
the plant ........................................... $ (3,900,000) $ (3,100,000)

4. Factors that should be considered by Mobile Seating Corporation before
making a decision include:
a. Alternative uses of the building and equipment.
b. Any tax implications.
c. The outside supplier’s prices in future years.
d. The cost to manufacture coverings at the Greenville Cover Plant in
future years.
e. The value of the time Restin and her staff would have spent
managing the Greenville Cover Plant.
f. The morale of Mobile Seating Corporation employees at other plants.

1. The lowest price Jenco could bid for the one-time special order of
25,000 pounds (25 lots) without losing money would $34,750, as shown
below.
Direct materials:
CW-3: 400 pounds per lot × 25 lots = 10,000 pounds.
Substitute CN-5 on a one-for-one basis to its total of 5,500
pounds. If CN-5 is not used in this order, it will be salvaged
for $500. Therefore, the relevant cost is............................ $ 500
The remaining 4,500 pounds would be CW-3 at a cost of
$0.90 per pound .............................................................. 4,050
JX-6: 300 pounds per lot × 25 lots = 7,500 pounds at $0.60
per pound ....................................................................... 4,500
MZ-8: 200 pounds per lot × 25 lots = 5,000 pounds at $1.60
per pound ....................................................................... 8,000
BE-7: 100 pounds per lot × 25 lots = 2,500 pounds at $0.55
per pound, the amount Jenco could realize by selling BE-7
[$0.65 market price – $0.10 handling charge] ................... 1,375
Total direct materials cost ................................................... 18,425
Direct labor: 30 DLHs per lot × 25 lots = 750 DLHs. Because only 400
hours can be scheduled during regular time this month, overtime
would have to be used for the remaining 350 hours.
400 DLHs × $14.00 per DLH ............................................... 5,600
350 DLHs × $21.00 per DLH ............................................... 7,350
Total direct labor cost ......................................................... 12,950
Overhead: This special order will not increase fixed overhead costs.
Therefore, only the variable overhead is relevant.
750 DLHs × $4.50 per DLH ................................................. 3,375
Total relevant cost of the special order................................. $34,750

2. In this part, we calculate the price for recurring orders of 25,000 pounds
(25 lots) using the company’s rule of marking up its full manufacturing
cost. This is probably not the best pricing policy to follow, but is a
common practice in business.
Direct materials: Because of the possibility that future orders would
exhaust existing inventories of CN-5 and BE-7 and new supplies
would have to be purchased, all raw materials should be charged at
their expected future cost, which is the current market price.
CW-3: 10,000 pounds × $0.90 per pound ................. $ 9,000
JX-6: 7,500 pounds × $0.60 per pound..................... 4,500
MZ-8: 5,000 pounds × $1.60 per pound ................... 8,000
BE-7: 2,500 pounds × $0.65 per pound .................... 1,625
Total direct materials cost ........................................ $23,125
Direct labor: 60% (i.e., 450 DLHs) of the production of a batch can be
done on regular time; but the remaining production (i.e., 300 DLHs)
must be done on overtime.
Regular time 450 DLHs × $14.00 per DLH ................ $ 6,300
Overtime premium 300 DLHs × $21.00 per DLH ....... 6,300
Total direct labor cost .............................................. $12,600
Overhead: The full manufacturing cost includes both fixed and variable
manufacturing overhead.
Manufacturing overhead applied:
750 DLHs × $12.00 per DLH ................................. $ 9,000
Full manufacturing cost ........................................... $44,725

Markup (40% × $44,725) ........................................ 17,890
Selling price (full manufacturing cost plus markup) .... $62,615

1. The original cost of the facilities at Ashton is a sunk cost and should be
ignored in any decision. The decision being considered here is whether
to continue operations at Ashton. The only relevant costs are the future
facility costs that would be affected by this decision. If the facility were
shut down, the Ashton facility has no resale value. In addition, if the
Ashton facility were sold, the company would have to rent additional
space at the remaining processing centers. On the other hand, if the
facility were to remain in operation, the building should last indefinitely,
so the company does not have to be concerned about eventually
replacing it. Essentially, there is no real cost at this point of using the
Ashton facility despite what the financial performance report indicates.
Indeed, it might be a better idea to consider shutting down the other
facilities because the rent on those facilities might be avoided.
The costs that are relevant in the decision to shut down the Ashton
facility are:
Increase in rent at Pocatello and Idaho Falls .................... $400,000
Decrease in local administrative expenses ........................ (60,000)
Net increase in costs .......................................................
$340,000
In addition, there would be costs of moving the equipment from Ashton

and there might be some loss of revenues due to disruption of services.
In sum, closing down the Ashton facility will almost certainly lead to a
decline in FSC’s profits.
Even though closing down the Ashton facility would result in a decline in
overall company profits, it would result in an improved performance
report for the Great Basin Region (ignoring the costs of moving
equipment and potential loss of revenues from disruption of service to
customers).

Financial Performance
After Shutting Down the Ashton Facility
Great Basin Region
Total
Revenues ............................................. $20,000,000
Operating expenses:
Direct labor ....................................... 12,200,000
Variable overhead .............................. 400,000
Equipment depreciation ...................... 2,100,000
Facility expenses* .............................. 1,500,000
Local administrative expenses** ......... 390,000
Regional administrative expenses ........ 400,000
Corporate administrative expenses ...... 1,600,000
Total operating expense ........................ 18,590,000
Net operating income ........................... $ 1,410,000
* $2,000,000 – $900,000 + $400,000 = $1,500,000

** $450,000 – $60,000 = $390,000
2. If the Ashton facility is shut down, FSC’s profits will decline, employees
will lose their jobs, and customers will at least temporarily suffer some
decline in service. Therefore, Braun is willing to sacrifice the interests of
the company, its employees, and its customers just to make his
performance report look better.
While Braun is not a management accountant, the Standards of Ethical
Conduct for Management Accountants still provide useful guidelines. By
recommending closing the Ashton facility, Braun will have to violate the
Credibility Standard, which requires the disclosure of all relevant
information that could reasonably be expected to influence an intended
user’s understanding of the reports, analyses, or recommendation.
Presumably, if the corporate board were fully informed of the
consequences of this action, they would disapprove.
In sum, it is difficult to describe the recommendation to close the
Ashton facility as ethical behavior. In Braun’s defense, however, it is not
fair to hold him responsible for the mistake made by his predecessor.

It should be noted that the performance report required by corporate
headquarters is likely to lead to other problems such as the one
illustrated here. The arbitrary allocations of corporate and regional
administrative expenses to processing centers may make other
processing centers appear to be unprofitable even though they are not.
In this case, the problems created by these arbitrary allocations were
compounded by using an irrelevant facilities expense figure on the
performance report.
3. Prices should be set ignoring the depreciation on the Ashton facility. As

argued in part (1) above, the real cost of using the Ashton facility at this
point is zero. Any attempt to recover the sunk cost of the original cost of
the building by charging higher prices than the market will bear will lead
to less business and lower profits.

Managerial Accounting for Managers Noreen 3rd Edition Solutions Manual

1. Yes, milling of flour should be discontinued if the price remains at $625,
but not for the reason given by the sales manager. The reason it should
be discontinued is that the added contribution margin that can be
obtained from milling a ton of cracked wheat into flour is less than the
contribution margin that can be obtained from using the milling capacity
to produce another ton of cracked wheat and selling it as cereal. The
analysis is:
Selling price per ton of cracked wheat ................................... $490
Variable expenses ($390 materials and $20 labor) .................. 410
Contribution margin per ton of cracked wheat ........................ $ 80
Added revenue from further milling of cracked wheat into
flour ($625 – $490)............................................................ $135
Less costs of further milling ($80 materials and $20 labor)* .... 100
Contribution margin per ton of flour ...................................... $ 35
* The overhead costs are not relevant, since they are fixed and will
remain the same whether the milling capacity is used to produce
cracked wheat or flour.
Therefore, the company makes more money using its milling capacity to
produce cracked wheat than flour.
2. Because the demand for the two products is unlimited and both require
the same amount of milling time, the company should process the
cracked wheat into flour only if the contribution margin for flour is at
least as large as the contribution margin for cracked wheat. In algebraic
form:
Added revenue from Costs of Contribution margin
milling cracked wheat - further ³ of
into flour processing cracked wheat
(Selling price of flour - $490) - $100 ³ $80
Selling price of flour ³ $80 + $490 + $100 = $670
Therefore, the selling price of flour should be at least $670; otherwise,
the mill should be used to produce cracked wheat.

356
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Leurs pas faisaient crisser le gravier et le guide qui les précédait ne
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immobiles, cette station obligée, leur donnaient loisir d’observer
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disciplinée, terrible par l’intelligence et un certain sens qu’il y
présumait de l’humain et du divin.
Il entra chez le frère Valier, après ce parcours qui lui avait paru
interminable, avec un sentiment de soulagement. Le Frère les reçut
dans un bureau très simple tendu de papier vert uni et rempli de
livres et d’instruments de géodésie. Il dut débarrasser deux chaises
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Après leur avoir demandé de leurs nouvelles, il inscrivit le nom et
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Il leur expliqua comment il avait l’intention de conduire les études de
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— Monsieur Régard est un de nos aumôniers et celui qui aura à
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Le prêtre, sans vaines protestations, fermait les yeux et secouait
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— Si, mon cher ami, dit le Frère Valier, vous êtes l’un des maîtres
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— Vous vous étonnez que Monsieur Régard n’ait pas son rabat ?
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Toutes les préventions de Noë arrivèrent d’un même flot ; le parti
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Celui-ci allait, pendant ce temps, de merveille en merveille.
L’immensité des dortoirs, des salles d’études, des réfectoires qu’on
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s’installer, faire connaissance de ses nouveaux camarades, de ses
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nombreuse. La nouveauté des méthodes d’enseignement à quoi il
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travail acharné ; la présence, aux récréations, de classes plus
avancées, d’élèves plus âgés et plus forts que lui, lui interdisait toute
prouesse physique ; ses voisins étaient de bons garçons médiocres,
joueurs, d’ailleurs sages et pieux, qui n’observaient rien et n’auraient
guère pu répondre à ses inquiétudes si son orgueil et sa prudence
ne lui avaient interdit de les manifester.
Ainsi, au bout d’une quinzaine de jours, il commençait à
s’habituer à cette vie qui lui avait paru étrange et même à
s’engourdir quelque peu, lorsque, un matin, vers les sept heures,
comme il achevait un problème, la porte de la salle d’étude s’ouvrit
et le Père Régard parut. Le surveillant vint à sa rencontre : « Voulez-
vous m’envoyer mes pénitents ? » dit le Jésuite. Le surveillant alla
chercher une liste dans son tiroir et prononça quelques noms. Des
élèves se levèrent et suivirent le Père Régard. Au bout de peu de
temps, ils revinrent l’un après l’autre. Le surveillant s’approcha alors
de Bernard et lui dit : « C’est à vous ; vous êtes le dernier. Vous
n’avez qu’à aller dans la chambre du Père Régard ; c’est la troisième
porte, au premier étage ; il y a le nom sur une carte clouée. » —
« Bon, se dit Bernard, il s’agit de se confesser. Allons-y. »
Il se sentait le cœur serré quand il frappa à la porte et que la voix
incolore du vieillard lui répondit. Mais son anxiété redoubla dès le
seuil. La chambre était tout-à-fait nue et à peine éclairée d’une
chandelle qui jetait de grandes ombres fantasques sur les murs. On
distinguait au fond, posé sur des planches au niveau du parquet un
grabat couvert d’un manteau noir. Quelques effets pendaient à une
patère ; une armoire minuscule à gauche de la porte devait
renfermer le linge de corps ; deux chaises et un prie-Dieu
complétaient l’ameublement. Nul ornement qu’au mur un christ en
bois, tout simple, et un bénitier avec un rameau de buis. Sur la
cheminée, une petite pile de trois livres qui parurent à Bernard être
des bréviaires, à côté du chandelier.
Le Père Régard était assis, dans la pose méditative qui lui était
familière, sur l’une des chaises auprès du prie-Dieu. L’adolescent
murmura une timide salutation qu’on accueillit d’un silencieux
hochement de tête. Il resta là, embarrassé, ne sachant quoi faire,
puis, se décidant, s’agenouilla sur le prie-Dieu. Le prêtre le repoussa
avec douceur.
— Ne vous agenouillez pas, dit-il, vous n’en n’êtes pas encore
digne. Asseyez-vous là, sur la chaise.
Bernard obéit au geste, tout décontenancé, avant même que le
son des paroles eût pu prendre un sens pour lui. Puis il comprit et il
sentit sourdre et monter lentement la colère. Quoi, on ne le jugeait
pas digne de ces mômeries ? Eh ! n’en valait-il pas un autre ? Que
faisait-il de plus ou de moins que ses camarades ? Et, après tout,
qu’est-ce que c’était que leur confession et leur bon Dieu qu’on
n’avait jamais vu ?… Ainsi grondaient en lui la révolte et les propos
de son entourage mêlés. Et ce curé qui gardait son inexplicable
mutisme, que lui voulait-il ? D’abord il avait une sale gueule ; pour
ça, on ne pouvait pas dire le contraire. Et puis, qu’est-ce que ça
voulait dire, ça, de faire monter quelqu’un pour l’humilier ? D’ailleurs,
cette humiliation, il ne la tolérerait pas, lui ; s’il s’était agenouillé ce
n’était pas qu’il gobât les histoires de ratichons, c’était parce qu’il
fallait le faire pour pouvoir rester là… Le Père Régard se taisait
toujours, la main sur les yeux, comme s’il se fût cru seul ; et Bernard
tout à coup pensa que si ce vieillard avait ainsi parlé c’est qu’il avait
justement deviné pourquoi Bernard s’agenouillait. Il est malin, se dit-
il. Mais si ce malin croyait à toutes les histoires de bon Dieu ? Non,
encore des sornettes du parti prêtre pour arriver à tout gouverner.
Mais la simplicité du lieu, la modestie et l’humilité évidente de
l’homme qu’il savait être un savant, l’évocation des ambitions qu’il
entretiendrait, lui, s’il était pareillement instruit, le subjuguèrent ; il
demeura perplexe et attentif ; le Père Régard se taisait toujours.
Enfin, il retira sa main, gardant les yeux clos et, de sa voix sans
timbre :
— Il est évident que je ne puis, mon enfant, vous accorder la
faveur des sacrements tant que votre âme pourrira dans l’état où on
l’a mise. Le malheur c’est que vous me paraissez profondément
gâté. Je vous ai suivi et observé tous ces jours-ci, j’ai vu vos notes,
j’ai parlé à vos surveillants et à vos professeurs. Vous travaillez
beaucoup, vous vous donnez du mal, vous êtes intelligent, vous
vous conduisez bien — et vous ne réussissez pas. C’est que la
grâce de Dieu n’est pas sur vous. Pourquoi ? D’abord parce que
vous ne priez pas du fond du cœur, ensuite parce que vous n’êtes
pas un vrai chrétien. Vous ne réussirez jamais en rien, que c’est
dommage !
Il s’arrêta et soupira. Bernard reconnaissait bien à part soi la
justesse des observations sur la vanité de son effort et il en était
profondément vexé. Il se défendit :
— C’est que je n’ai pas l’habitude de vos manières de travailler.
Et puis, au tirage au sort des compositions orales, j’ai toujours les
problèmes difficiles.
— Ne m’amusez pas avec vos « manières de travailler » ; et ne
me dites pas que le sort vous donne les problèmes difficiles. Vous
ne vous en tirez pas, voilà tout, c’est le doigt de Dieu. Vous
n’arriverez à rien dans la vie, vous serez toujours le dernier, le
domestique des autres.
Rien ne pouvait davantage alarmer Bernard. Le confesseur
continua sur le même ton, usant de tous les arguments, retournant
tout en preuve, tirant de Bernard tous les aveux qu’il interprétait pour
sa cause avec une évidence éclatante, le tout sur un ton monocorde,
avec une sorte d’indifférence résignée, sans qu’à aucun moment se
fît jour une tentative d’apologétique ou de conversion. A la fin
l’adolescent pleurant à chaudes larmes, voyant sa vie gâchée, la
réussite impossible, toutes ses espérances anéanties, pleinement
convaincu de ce que lui disait le prêtre, le supplia de le confesser, de
le guérir.
— Hélas ! répondit tristement le Père Régard, je crois bien que la
chose est au-dessus de mes forces. Enfin, nous étudierons cela.
Revenez la semaine prochaine et tâchez, en attendant, de trouver
par vous-même la voie de Dieu.
L’enfant redescendit en se tamponnant les yeux.
— Je crois, disait son confesseur au Frère Valier quelques
heures après, je crois que nous pourrons arriver à sauver cette âme
bien qu’elle soit très compromise. Il n’y a pas de cœur, les sens ne
sont pas éveillés encore ; absolument rien de suspect, chasteté
certaine ; mais il n’y a pas non plus cette vague tendresse qui peut
aider à la conversion ; et l’intelligence qui est indéniable me semble
purement critique. C’est elle qu’il faut convaincre par des preuves ;
chose curieuse, l’auxiliaire qui peut donner de l’intérêt à mes paroles
c’est l’ambition dévoratrice de ce petit. Dieu lui apparaîtra d’abord un
aide, un atout dans son jeu. Il l’admettra comme au pari de Pascal.
Une fois logé chez lui, nous saurons bien l’y incruster. Il pourrait faire
un excellent serviteur de Dieu, ajouta le Père songeur.
— Eh ! là, dit le Frère en riant, si jamais cela devait arriver, je le
réserve pour ma congrégation et non pour la vôtre.
Bernard ne se doutait point qu’on fît déjà état de ses dispositions
ni même qu’on le crût vaincu. Il dut passer par quelques épreuves
qui furent pénibles à son orgueil. Le jour de Noël, il resta seul à son
banc comme un pestiféré tandis que ses camarades allaient à la
Sainte Table ; il ravalait des larmes de rage ; il lui semblait que tout le
monde le montrait au doigt. Ses deux voisins qui le considéraient
comme une pauvre brebis perdue, l’observaient à la dérobée. La
magnificence de la cérémonie, la douceur des chants, l’accent de
joie, l’atmosphère heureuse, tout cela qu’il sentait si bien et à quoi il
n’osait participer lui fendait le cœur. A l’issue de la messe de minuit,
il dut monter seul au dortoir ; il entendait rire et plaisanter ses
camarades qui réveillonnaient au réfectoire ; il imaginait sa place
vide. Peu à peu, se formait en lui l’image d’un monde de saints, de
vierges et de dieux d’où il était exclu et qui distribuaient ces joies, qui
aidaient insidieusement ses camarades, qui les pousseraient dans
l’existence. Il touchait à présent ce monde jusque-là ignoré ; il se
rendait bien compte que ses condisciples avaient une vie spirituelle
qu’il n’avait jamais soupçonnée ; et, comme il était fort jeune, il ne
pouvait conclure qu’à la réalité de ces êtres supérieurs avec qui ils
formaient société. D’ailleurs, autour de lui on ne cessait de relater
des traits édifiants ; la puissance divine s’exaltait en des miracles
irréfutables ; les raisonnements persuasifs du Père Régard, les plus
simples, celui de l’œuf et de la poule, celui du premier moteur, le
trouvèrent convaincu. Et, enfin, sa puberté tardive arrivant, il se
sentit tout à coup des élans de tendresse, une soif de conviction,
d’affection universelle, de douceur et de protection. Le jour où il fut
autorisé à communier, il donnait depuis longtemps à tous les
preuves les plus certaines d’une foi enflammée.
Par un phénomène qui n’avait point paru miraculeux aux
professeurs, son intelligence et son travail avaient dans une marche
curieusement parallèle peu à peu imposé leur primauté. Les
problèmes qui lui étaient échus demeuraient les plus difficiles, mais il
les comprenait et les résolvait. L’ordre des devoirs et des leçons
avait fini par s’accommoder fort bien à sa méthode de travail. Tout lui
semblait aisé et agréable. Tout lui souriait ; jamais il n’avait si bien
senti sa réussite ; et, à la fin de l’année scolaire il ne fut pas surpris
quand le palmarès l’annonça comme ayant presque tous les
premiers prix.
Il revit à cette occasion tous les siens réunis ; et combien fiers de
ses succès ! Il n’avait eu toute l’année que des visites espacées
tantôt de l’un tantôt de l’autre, visites qu’il souhaitait d’abord puis
redouta lorsqu’il fut pris par ses études et son ardeur religieuse. Il
songeait à présent avec un morne ennui à ce qu’allaient être ces
deux grands mois de vacances passés rue des Rosiers ; mais l’abbé
Régard, à la fin de la cérémonie de distribution des prix, vint
courtoisement présenter ses hommages aux parents du jeune
lauréat ; et il glissa dans la conversation qu’il avait organisé une
colonie au bord de la mer. Bernard demanda sur-le-champ à Noë de
le laisser partir et on y consentit sans trop de peine : il ne passa
qu’une semaine à la maison ; il sentit s’y fortifier son dégoût pour
cette vie médiocre et laide ; sa piété nouvelle s’irritait des brocards
traditionnels contre la religion ; il dut à plusieurs reprises ronger son
frein ; le soir, quand Noë lisait à haute voix des vers d’amour en
regardant parfois Eugénie qui tricotait paisiblement sous la lampe,
l’adolescent se levait, trouvant bêtes tous ces gens qui ne pensaient
pas au salut éternel et perdaient leur temps à des sornettes. Il sortait
dans le crépuscule estival ; les couples langoureux n’émouvaient
pas ses quinze ans ; il entrait dans ce petit jardin qui est au chevet
de Notre-Dame et il rêvait à l’ombre de la cathédrale : il eût désiré
revivre l’aventure de ses architectes et de quelqu’un des grands
évêques d’autrefois ; il les voyait crosse en main et le casque au lieu
de la mitre, parmi leurs vassaux, imposant la religion du Christ et
l’obéissance à son représentant ; il voulut un jeudi visiter le Trésor et
en revint éberlué ; d’autres fois, il s’accoudait au parapet et passait
des heures à voir décharger les gabarres ; il supputait la valeur de la
cargaison et le tonnage ; il établissait mentalement la comptabilité de
l’entreprise et ce qu’elle pouvait donner, bénie de Dieu. Il parcourait
aussi les églises, affolé d’amour divin, de repentirs pour des
peccadilles qu’il qualifiait de crimes et assoiffé d’indulgences dont il
tenait un compte exact. Il ne faisait plus maintenant d’éclats, et ses
colères ne se traduisaient que par une pâleur excessive et une
montée légère d’écume au coin des lèvres ; mais il semblait que,
plus il les retenait, plus il s’en accumulait en orages menaçant de
crever : il en accusait le Diable. Au reste il ne pensait qu’à soi, en
débat perpétuel avec lui-même et n’accordant à ce qui l’entourait
qu’un regard étranger. Un jour, Eugénie qui l’observait lui reprocha
sa sécheresse de cœur ; il en eut un grand choc et s’en accusa
aussitôt comme d’un péché épouvantable dont il ne pressentait pas
possible un véritable repentir. Il ennuya alors sa tante de simagrées
ridicules, demandant pardon, excédant l’imprudente de ses
questions et de ses larmes, lui représentant tantôt son avenir
spirituel compromis par cette affreuse sécheresse de cœur, tantôt le
service qu’elle lui avait rendu en lui signalant un tel danger. Elle finit
par lui dire de ne pas tant faire la bête, que le bon Dieu était moins
sot que lui, de l’embrasser et de tirer un trait là-dessus. Il baisa ses
joues avec emportement en la prenant dans ses bras. Le sein tiède
palpita sous sa main ; la peau fraîche avait une douceur sapide, une
odeur de verveine et le toucher du velours. Elle lui rendait le baiser,
innocente et maternelle, de sa pourpre rose humide. Il se sentit
extraordinairement troublé et décida de l’éviter désormais.
D’ailleurs il partait le lendemain. A la gare d’Austerlitz il retrouva
l’abbé Régard et une douzaine de camarades ; tout aussitôt les
siens furent oubliés et seul compta le magnifique avenir.
Ils n’arrivèrent à destination que le lendemain soir. La colonie
avait élu domicile dans un ancien lazaret situé sur la côte au point le
plus dangereux de l’épine rocheuse qui court entre Cette et Agde.
C’était un lieu splendide et désolé, hanté de quelques rares
pêcheurs qui vivaient sordidement sous la tente. Le lazaret était
lugubre. Il comprenait quelques pavillons dans un quadrilatère de
murs épais et fort élevés dont une partie surplombait la mer et
répercutait le ressac. Les pavillons étaient en rez-de-chaussée, le
sol carrelé de briques rouges émaillées, glaciales aux pieds nus des
enfants. Une chaleur torride faisait éclater les pierres de ce désert ; il
n’y poussait que des herbes salées, d’énormes chardons dorés, des
euphorbes et des arnicas. Un vent terrible grondait perpétuellement
dans les tuiles ; et la mer sans marée ne s’arrêtait jamais. Bernard
connut là la violence et l’exaltation de la prière ; le Père Régard les
agenouillait tout à coup sur les rochers devant l’aube ou le
crépuscule, les écrasait de la grandeur prodigieuse des cieux et
élevait leur âme dans une série d’invocations haletantes et
précipitées comme celles qui galvanisent les foules aux processions
de Lourdes. Parfois ils entraient tous ensemble dans le flot et
passaient en faisant la chaîne au dessus d’une cave dangereuse où
deux ou trois perdaient pied : « Dieu vous soutient ! » criait le prêtre ;
les adolescents reparaissaient, crachant et s’ébrouant, mais rieurs et
sans avoir eu un instant de crainte ; ainsi est la vraie foi. Souvent
aussi ils chantaient des hymnes composés par le Père à la louange
des Saints ; il les réunissait autour de lui après le jeu, sur quelque
plage sauvage où le vent faisait flotter leurs vêtements et soulevait
leurs cheveux ; ils tiraient leur goûter d’un panier et mangeaient d’un
appétit dévorant ; certains s’abstenaient, se mortifiant pour des
raisons obscures, des péchés véniels ou des velléités dont ils
redoutaient qu’elles prissent figure ; on ne leur demandait rien. Le
Père les regardait et quelquefois souriait en remerciant le Ciel ; ces
douze garçons soigneusement triés avaient tous les yeux clairs, nets
de cerne, la mine belle, pure et sans tache ; il les savait droits,
irréprochables ; leur bonheur faisait le sien. Leur âge s’échelonnait
de quatorze à dix-huit ans ; le grand Texin songeait déjà à prendre la
soutane ; Lormier n’avait pas la vocation et n’y prétendait point, mais
où qu’elle s’exerçât, sa piété simple et forte ne pouvait que faire du
bien ; Daumas… Midel… il les passait en revue ; aucun n’était
revenu de si loin ni si haut que cet ardent petit Rabevel dont le
sombre bouillonnement l’inquiétait encore parfois. Justement c’était
lui qui, cette fois, lui demandait au nom de ses camarades, de leur
raconter une vie de Saint. Il sourit. Le miracle extérieur, la sujétion
des forces de la Nature en imposerait toujours aux enfants —
comme aux hommes, ajouta-t-il à part soi.
Mais déjà ses pupilles discutaient. Gasier réclamait un nouvel
épisode de la vie des Franciscains ; il se délectait des prières
d’Assise ; toute la nature lui était proche et parente ; il en buvait la
fraîcheur à longs traits : ma petite sœur l’eau, mon petit frère le
passereau… quelles délices ! Seul, il se racontait à mi-voix les
voyages du petit Pauvre et de son Compagnon ; rien de romanesque
ne l’y entraînait mais une candeur venue intacte du fond des âges.
Pourtant, Midel eût préféré les récits d’évangélisation : Xavier était
son héros ; il le voyait petit et noir, plein d’une force formidable par le
signe de la croix, retourner des continents. « Et vous, Rabevel ? »
demanda le Père. Bernard releva sa tête pensive, il songeait,
répondit-il, au terrible supplice de Saint Laurent que le Père leur
avait décrit la veille : « Comme Dieu est bon de soutenir un chrétien
en de pareilles traverses ! » dit le petit Gazier. Mais Bernard se
révolta : Certainement Saint Laurent avait trouvé sa réjouissance
dans la foi, sans quoi où eût été le mérite ? Il voyait le saint
marmonnant des prières à voix basse, puis criant ses invocations
lorsque la chair déjà grésillait, et enfin, hurlant sa foi à pleine gueule
lorsqu’il n’était plus qu’une plaie de viande vive toute fumante ; il
voyait le prétoire obscurci de vapeurs, puant la sanie, le graillon, le
charbon de terre, les bourreaux mi-asphyxiés par l’âcreté du nuage ;
il décrivit le supplice comme s’il y assistait ; les souffrances du saint
étaient les siennes ; il en goûtait l’horreur, il en savourait le tourment
et il en avait mal. Il se sentait soudain la vocation du martyre ; un
délice insoupçonné lui sembla tout-à-coup la compensation du sang.
Il eut un éblouissement : peut-être était-il prédestiné ? peut-être
serait-il un saint ? Il se dressa d’un sursaut.
— Prenez garde à l’orgueil, dit le Père.
L’amertume emplit sa bouche. En rentrant, il traîna derrière ses
camarades. Comme il approchait du lazaret il vit non loin du chemin
deux enfants de pêcheur qui riaient et faisaient de grands gestes ; il
courut à eux. Les gosses avaient enfermé un scorpion dans un
cercle de brindilles enflammées. Il assista, haletant, aux efforts de la
bête venimeuse, à sa réflexion, à ses tentatives redoublées lorsque
l’inexorable cercle se resserrait ; une joie cruelle le tenaillait à crier ; il
se sentait près de trépigner. Enfin, quand le cercle fut tellement
réduit que le scorpion se vit léché des flammes et, brusquement
relevant la queue, se tua net en dardant dans sa propre tête son
épine empoisonnée, il crut pâmer ; jamais choc plus merveilleux ; il
s’appuya au rocher, secoué d’un spasme ; et il tenait son cœur pour
rejoindre au galop ses condisciples qui l’appelaient.
Ainsi, parfois, des signes paraissaient qui eussent pu lui révéler
son climat véritable s’il avait été en âge de s’examiner avec fruit ;
ces signes ne lui échappaient point mais il les dédiait à la partie la
plus artificielle de lui-même, celle-là qui excitait le plus ses ardeurs
du moment et, pour ce motif, lui semblait la plus vraie. Le Père
Régard s’y trompait comme lui, cette piété sincère et si vive, ces
élans passionnés le ravissaient et il n’y voyait pas le cheminement
dérivant d’un tempérament de feu qui cherchait à s’évader par les
voies d’une imagination voisine du délire, hors d’un corps intact.
Angèle Mauléon, sa petite amie d’autrefois, l’avait un jour surpris sur
la plage ; elle était venue là prendre les bains de mer avec sa tante ;
non sans préméditation. Il la vit avec ennui. En maillot, grande,
nerveuse et parfaite, elle évoluait dans les eaux comme un Triton.
Mais l’enfant vierge n’en était pas ému. L’heureuse ignorance de ses
sens lui faisait une vie extraordinairement belle ; sa sûre mémoire
s’emplissait de sites terrestres et spirituels qu’il rapporta au collège
où de temps à autre il se donnait le divertissement de les retrouver
avec un mélange de ravissement et de regret. A peine était-on en
Novembre que déjà il aspirait au mois de Juillet suivant pour
retourner au Lazaret.
Les cinq années qu’il dut passer encore au Collège ne lui furent
pas lourdes. Cette exaltation spirituelle le soulevait, ses succès, son
goût du travail lui rendaient tout facile : jamais la durée ne lui parut
plus suave ; jamais il ne devait être plus heureux. Il suivait le cours
de commerce et de finance que les Frères avaient inauguré depuis
1858 et qui était fort réputé dans le monde des affaires auquel il
fournissait des employés fidèles, actifs et capables. Il était dirigé par
le Frère Maninc, petit homme trapu et rose, toujours souriant, aux
yeux pétillants d’astuce. Il ne se contentait pas d’apprendre à ses
élèves la comptabilité, le droit usuel, le régime des transports et des
marchandises ; mais il les mettait en garde contre les roueries des
escrocs et de la finance interlope ; il leur montrait la loi, la
commentait, en expliquait les lacunes et, sur des exemples célèbres,
tenant en mains la Gazette des Tribunaux, leur faisait voir comment
à chaque instant, par des merveilles d’ingéniosité, l’aventurier tourne
les prescriptions du Code. Il décrivait la lutte passionnante de la
jurisprudence pratique avec l’escroc ; les textes additionnés aux
textes, les dispositions accumulées, toutes les espèces multiples
enchevêtrées, les contradictions inévitables entre les Cours,
l’hésitation de la conscience humaine devant le fait dont on ne sait à
quel moment il devient frauduleux. Parfois il s’exclamait gaiement
contre les « chats fourrés » : ils ne connaissaient pas leur métier,
telle Cour paraissait réclamer un texte pour une espèce particulière :
les nigauds ! mais il existait, ce texte ! que ne combinait-on tel article
et tel autre du Code : les voyez-vous, rapprochés, comme ils
s’appliquent merveilleusement au cas en question ? Toutes ces
arguties, cette intime connaissance de l’homme, passionnaient
Bernard ; il émerveillait son maître qui lui disait en riant : « Vous avez
le choix : ou bien remplacer le petit Frère Maninc quand il sera
vieux ; ou devenir le premier financier de ce temps… à condition
d’avoir des capitaux pour commencer ! » Bernard faisait une grimace
amère : des capitaux ! et poussait un soupir de regret : il se savait
précoce, résolvant en se jouant tous les problèmes de comptabilité,
d’organisation financière ou de droit usuel avec une perspicacité
sans pareille, trouvant la solution juste où des praticiens se fussent
trompés. Le Frère Maninc en vint à lui confier des examens de livres
dans les expertises dont on le chargeait. Bernard en concevait de
l’orgueil ; il suivait attentivement les affaires litigieuses dans les
journaux spéciaux ; mais parfois il se reprochait d’admirer tel
aventurier particulièrement subtil qui avait su si bien tourner la loi sur
les Sociétés ; il était heureux qu’on l’eût coffré tout de même comme
si sa réussite eût dû l’exposer à une grande tentation. Souvent
cependant il se disait que, les apologues juridiques du Frère Maninc
venant tous de la Gazette des Tribunaux, la moralité n’en pouvait
qu’être toujours exemplaire mais que, peut-être, il existait de par le
monde des aventuriers plus subtils encore ou plus puissants qui
vivaient tranquillement honorés de tous. Ces Rothschild de Londres
dont parlait autrefois Lazare ?… Il était bien vrai aussi que, parfois,
on était à cheval sur l’honnête et le malhonnête. Et, là également, il
se remémorait avec une sorte de gourmandise satisfaite les leçons
que leur faisait le Père Régard sur la casuistique. Le Père jugeait
nécessaire au développement de l’intelligence la connaissance de
cet art en effet admirable qui soumet à son attention les retraites les
plus secrètes de l’âme. Bernard y prenait un goût de l’examen de
conscience, de la méditation ; il y multipliait son aptitude déjà grande
à la prudence et, par ce tour devenu réflexe, exerçait sur son
caractère l’empire le plus vigilant. En outre, une sécurité intérieure
l’armait désormais ; il se voyait mis peu à peu en mesure de
disséquer la pensée étrangère et il retirait de cette conviction une
puissance qui se traduisait en sérénité. Il se tenait désormais pour
inattaquable.
Il entrait dans sa dix-neuvième année, on était en Juin 1883,
lorsque le Frère Valier qui, à plusieurs reprises l’avait déjà pressenti,
lui demanda fort sérieusement s’il croyait avoir la vocation. « Je vous
ai accordé un an pour vous interroger, dit-il, il est temps maintenant
de vous donner à vous-même une réponse. Si vous n’avez pas la
vocation on n’a plus rien à vous apprendre ici, et vous pourrez à la
fin de l’année débuter dans une carrière où vous saurez faire
beaucoup de bien et où nous ne vous ménagerons pas notre appui.
Si vous avez la vocation, vous aurez à choisir : être prêtre et alors,
passer une année à perfectionner le peu d’humanités que je vous ai
fait faire, puis aller au Grand Séminaire ; être Frère et alors passer
au Petit Séminaire spécial d’où vous pourrez retourner ici comme
adjoint au Frère Maninc qui serait heureux de vous avoir auprès de
lui ». Bernard demanda encore une quinzaine de répit. « C’est
accordé, dit le Frère. D’ailleurs, je pense qu’il serait bon pour vous
de passer ces quelques jours auprès des vôtres. En somme, vous
ne devez rien faire sans leur conseil et leur assentiment. »
En sortant du collège, il regarda sa montre : dix heures ; il avait le
temps de passer chez Blinkine et d’arriver pour déjeuner rue des
Rosiers ; il se rendit tout de suite chez le banquier qui le reçut fort
aimablement, mais ajouta :
— Vous n’avez sans doute pas vu Abraham depuis plus d’un
mois sans quoi vous sauriez qu’il n’habite plus ici.
— Comment ? fit Bernard interloqué.
— Parfaitement, dit le banquier que cet étonnement amusait.
Ignorez-vous donc que, vous comme lui, êtes maintenant de grands
jeunes gens ? Alors, comme Abraham est sérieux, que je suis
tranquille sur son travail et que je sais qu’il ne joue pas, ne boit pas,
n’excède pas enfin les fredaines de son âge, je lui ai accordé son
petit logement où il prépare sa licence. Allez donc le voir, 84 bis Quai
de l’Horloge, il sera si content de bavarder avec vous !
— Est-ce bien sûr qu’il soit chez lui ? demanda le jeune homme
qui se sentait subitement intimidé et qui s’en voulait.
— Oui, c’est sûr, je ne voulais pas vous dire qu’il y aurait pour
vous une surprise ; mais il y a une surprise pour vous et c’est cela
qui me fait certain de la présence de mon fils à son logement.
Bernard tout intrigué se rendit rapidement à l’adresse indiquée ;
depuis le palier il entendait des rires, des bruits d’assiettes, des
fredonnements de voix féminines et comme une rumeur de fête.
— Tiens, se dit-il, on s’amuse là-dedans. C’est peut-être la
surprise : quelque anniversaire…
Il sonna. Il perçut une galopade, des cris : Ce sont les huîtres !
Non, la glace ! répondait la voix d’une femme. J’y vais ! Non, c’est
moi.
La porte s’ouvrit. Une fille svelte et jolie parut qui prit une mine
effarouchée. Elle examina Bernard, ses pantalons élimés et raides,
son veston étriqué, trop court des manches, l’inénarrable chapeau
rond d’où sortait une tignasse ébouriffée ; elle lui trouva l’air d’un
sacristain.
— Si vous venez pour le pain bénit, lui dit-elle en éclatant de rire,
il est trop tôt.
Bernard, noir de honte et de colère, se taisait en fronçant les
sourcils.
— De quoi, reprit-elle, on peut pas blaguer sans fâcher Mossieu ?
Vous devez vous tromper d’étage, hein ? ici c’est chez le Zigue
Blinkine.
La voix d’Abraham se fit entendre ; mais elle :
— Il dit rien, il est gelé. Je te disais bien que c’était la glace. » Et
elle pouffa de rire.
Bernard se détourna, prit la rampe, mais Abraham arrivait :
— Comment ! c’est toi ! et tu t’en serais allé ! au lieu de claquer
cette insupportable personne ?
Il envoya une tape amicale à la jeune femme qui feignit la
douleur et tendit sa joue à Bernard avec une grâce irrésistible :
« Bécot là, pour guérir ». Il la baisa du bout des lèvres. « Autre bécot,
dit-elle, et mieux que ça. » Puis : « Encore un autre pour faire ami »
et comme il se penchait de nouveau elle vira brusquement et écrasa
sur la sienne une bouche humide comme un fruit. Il sourit.
— Ça va ? fit-elle en arrangeant ses cheveux. Cependant
Blinkine philosophe et narquois s’amusait.
— Je vais te faire voir un oiseau plus rare et que tu aimeras
mieux », lui dit-il. Il ouvrit la porte d’une petite pièce qui lui servait de
salon et de bureau. « Regarde si tu reconnais ce monsieur ? »
C’était François.
— Eh ! que je suis content, mes enfants, disait un moment après
Abraham tandis que la concierge, cuisinière de fortune, leur servait
les huîtres ; quelle veine de t’avoir là le jour de l’arrivée de François,
mon pauvre Bernard ! Dire que j’ai hésité à venir te demander à ta
boîte ! Ah ! si les bons Frères savaient que tu déjeunes avec un juif,
un mécréant et une fille folle de son corps !
— Une fille folle de son corps ! entendez comment il vous traite,
Mâme la concierge, dit le friquet… A moins que tu dises ça pour
moi ? ajouta-t-elle d’un ton plein de courroux et de tendresse. Si oui,
je divorce ! Ah ! Monsieur vient quand ça lui chante, m’attendre à la
sortie de l’atelier ? Je t’en ficherai, moi ! Au bras d’un autre, fou de
son corps.
La stupéfaction de Bernard touchait au scandale. Il existait donc
des femmes aussi libres de propos et d’allure et de pensée, aussi
parfaitement libres, libres tout court, libres enfin ! et séduisantes…
car elle plaisait cette petite diablesse ; on la sentait gentille et bonne
fille, tout de même ; rien de vicieux dans cette physionomie de
gamine. Il se rembrunit. L’enfer la guettait. Et tout d’un coup la
disproportion du châtiment au péché lui apparut évidente. Voyons,
ce n’était pas possible ! il n’avait jamais envisagé le péché que sous
deux aspects : l’un était d’une figure sombre, tragique et solitaire,
comportant un satanisme, une conscience effroyable dans le mal,
une tentative métaphysique de bouleversement de la création ;
l’autre, paré de couleurs riantes, c’était le vice rongeur qui
décompose et se complaît en soi. Il n’avait jamais envisagé, entre
ces extrémités également coupables, cette expansion de naturel
qu’il ne pouvait s’empêcher de sentir ignorante du stupre et
innocente de toute offense à la Divinité. Tout son édifice si rationnel,
si parfaitement construit et dont la stabilité n’avait pour lui jamais fait
question lui parut ébranlé ; il s’inquiéta. Et, en même temps, il lui
semblait que montait une espérance d’en bas comme du fond des
entrailles.
Mais François racontait son existence marine. Il était hâlé,
presque noir, carré d’épaules ; on le sentait d’une colossale vigueur.
Il avait gardé son sourire rêveur et il ne semblait pas qu’aucun
nuage eût passé sur ses enthousiasmes. Les escales, les bordées,
la chasse dans les paradis déserts, le miracle des climats sur les
vierges terres dans les mers du Sud, tout cela passait sur ses lèvres
en paroles enivrées dites comme pour lui seul tandis que les yeux
regardaient à l’infini. La blonde Claudie l’admirait.
— Qu’il est beau, ce petit, disait-elle, hein, qu’il est beau ! Et il a
tout vu ! En avez-vous vu de plus belle que l’enfant ? ajoutait-elle en
se désignant.
Non, certes, jamais d’aussi belle ; il racontait les femmes des
pays lointains, les femelles brusquement étreintes dans les bouges,
les molles mélanésiennes, les belles canaques des Iles-sous-le-Vent
qui étaient des épouses temporaires durant le chargement du
coprah ; et, quelquefois, la passagère de l’unique cabine,
l’Américaine ou l’Australienne neurasthénique qui voulait passer sur
un bateau à voile trois mois entre le ciel et l’eau et qu’affolaient le
sel, l’azur et l’alizé…
Claudie battait des mains. Qu’il était crâne ! et cette vareuse de
marin, ce col bleu dégagé, comme ça lui allait. Il ne fallait pas
s’étonner qu’il eût des succès ce beau gars. Et, tout d’une pièce, se
tournant vers Bernard :
— Ce cachottier là aussi doit en avoir eu des bonnes fortunes,
allez. Ça plaît aux femmes cet air patelin avec ces yeux pas
commodes ! Racontez-nous ça un peu, dites ?
Bernard s’apercevait avec stupeur que sa gêne dans cette
conversation venait non de la liberté du sujet mais de n’avoir rien à
dire ; il convenait qu’à l’instant il souhaitait sourdement d’avoir eu
quelque aventure, d’avoir péché, qu’il se sentait inférieur ; il eut
honte de lui-même et son esprit se perdait parmi les méandres
compliqués des désirs, des scrupules, des remords mutuellement,
instantanément et à l’infini engendrés.
On servait le café lorsque Claudie ayant jeté les yeux sur la
pendule poussa un cri, prit les hommes à témoin de sa stupeur et de
la vérité de son oubli, enfonça son chapeau d’un coup de poing,
embrassa tout le monde et disparut en trombe dans l’escalier en
criant : Qu’est-ce que la Première va me passer !
— Bah ! dit Blinkine, on la sait consciencieuse et c’est une
ouvrière de premier ordre, on ne lui dira rien. Et maintenant que ce
démon est parti, parlons un peu de toi, Bernard, que deviens-tu ?
Il s’expliqua, conta sa vie sans rien omettre d’essentiel, s’avoua
fort embarrassé, demanda conseil. François fit une moue ; il avouait
son incompétence et se désintéressait d’ailleurs de toutes les
questions de cet ordre. Les seules choses qui pussent retenir son
attention étaient, en dehors de la technique de son métier qu’il
connaissait bien et où il cherchait à se perfectionner par tous les
moyens, les livres des navigateurs, des explorateurs et des poètes.
Le reste…
Mais Blinkine réfléchissait.
— Écoute, Rabevel, dit-il à son ami, ce sont là des choses fort
sérieuses et qui engagent toute une vie. En somme jusqu’ici tu as
vécu dans une serre, tu ne sais rien de l’existence, tu t’es fait un
monde spécial et idéal, fort beau, propre, merveilleux ; mais, sans te
fâcher, bien éloigné de la vie courante ; ton étonnement de tout-à-
l’heure devant cette enfant suffira à te le prouver à toi-même. On te
donne les moyens de continuer cette existence virtuelle, cette
espèce de mirage miraculeux en marge de la vie, ce jeu de
l’intelligence et de la conscience. On te donne à choisir : cela vaut la
peine. S’il faut tout te dire, j’envie, moi, l’existence du Frère Maninc ;
ce pur jeu de l’esprit m’enchante, la spéculation sur les passions
humaines qui arrivent à lui épurées sous les espèces de jugements
et des articles du Code, la spéculation sur les valeurs et les
marchandises purement, admirablement théoriques, les
combinaisons de graphiques, ces recherches désintéressées de lois,
tout cela venant se combiner aux études casuistiques de ton Jésuite,
quel rêve d’une existence surprenante et sans seconde !
Évidemment Blinkine eût sauté sur cette occasion.
— Je ne vois pas cela tout à fait ainsi, répondit Bernard
posément. Toi, tu es un imaginatif, un mathématicien pur, un
abstrait ; tu es le frère spirituel de Maninc. Nous sommes loin l’un de
l’autre. Maninc m’instruit, il me donne des armes, mais je ne vais pas
sur sa route. Il cultive l’étude des hommes pour elle-même ; moi je la
pratique pour m’en servir ; il étudie à fond les combinaisons de la
finance et du commerce pour leur beauté propre ; moi je ne
m’intéresse à elles que pour en user. S’il parle d’un produit A, mes
mains palpent du coton, soupèsent des grains. S’il fait intervenir une
valeur X, je vois le chèque, les vignettes de la Banque de France, et,
derrière tout cela, je ne sais quoi de somptueux mais de concret : un
hôtel, un monsieur en pelisse qui me ressemble, une voiture de
maître avec des cuivres reluisants… Tu comprends, pour le moment
je me confesse à toi ; il n’y a pas péché à avoir de l’ambition si elle
est saine et propre ; et je crois que c’est mon cas. D’autre part, je
suis bien attiré par cette quiétude de la chapelle, l’ardeur des
prières, les voluptés souveraines des sacrements. Mais l’un et l’autre
sont-ils possibles ! Me voilà hésitant devant l’existence que je ne
connais pas.
Blinkine l’avait écouté avec attention.
— Il ne s’agit pas de tout cela pour le moment, répondit-il. J’ai
plus que toi, je le vois, l’esprit spéculatif pur et même métaphysique.
Or il s’agit de vocation. Je me suis interrogé moi-même à un moment
de ma vie là-dessus ; le rabbin me pressait beaucoup. Et note que,
chez nous, la contention de la chair n’existe pas, les rabbins sont
mariés. Oui, je sais, je sais, ou plutôt je devine ce que tu vas dire ;
mais, Bernard, pour pur que tu sois en cet instant, rien ne te garantit
l’avenir ; peut-être ne le seras-tu plus dans un mois, dans huit jours,
que dis-je ? demain, ou ce soir. Enfin cette grave question qui est
d’un ordre naturel, donc divin, mise à part, je vois dans la vocation
une chose pure de tout alliage, de tout calcul, un appel irrésistible et

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*Includes pro-rated loss on disposal of the van if it is donated to a

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Difference in favor of continuing

Difference in favor of purchasing from the

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2. In this part, the constraint is the available pounds of plastic pellets.

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2. To answer this question, it is desirable to compute the contribution

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Product X Product Y Product Z

Products Y and Z should be processed further, but not Product X.

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Product Product Product

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The same solution can be obtained by preparing comparative income

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1. Fixed cost per mile ($3,500* ÷ 10,000 miles) . $0.35

2. The variable operating costs would be relevant in this situation. The

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* The remaining $6 of fixed manufacturing overhead cost would

Profits would increase by $60,000 if the outside supplier’s offer is accepted.

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2. The company should concentrate its labor time on producing product A:

3. The amount Banner Company should be willing to pay in overtime

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Contribution margin lost if the Bath Department is dropped:

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The two-thirds of the traceable fixed manufacturing overhead costs that

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3. In a decision of whether to give up fishing altogether, nearly all of the

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1. Contribution margin lost if the tour is discontinued .. $(2,100)

The following costs are not relevant to the decision:

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Ticket revenue ................................. $3,000 $ 0 $(3,000)

2. The goal of increasing average seat occupancy could be accomplished

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Net avoidable costs $168,000

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2. Sales revenue through regular channels

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3. The company has three alternatives for obtaining the necessary

The costs under the three alternatives are:

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