Question 2Capital University, a midsized university in a capital city recently received an offer from BrainTrust TeachingServices to teach all of the first year accounting courses at the university. There are currently 10 sections of1st year accounting taught at Capital University. Cost per section are as follows:DescriptionCostProfessorsClassroom/buildingTeaching Assistants$20,000$4,000$2,000NotesHalf of these costs can be avoided by laying off staffThis space can not be used for other purposesAll costs can be avoidedAs well, it is estimated that fixed administrative costs are $1,000 per section.BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000Should Capital accept this special offer? (include both qualitative and quantitative analysis)

If there is incremental income or cost savings from a special offer then, such a special offer…

Question 2 Capital University, a midsized university in a capital city recently received an offer from BrainTrust Teaching Services to teach all of the first year accounting courses at the university. There are currently 10 sections of 1st year accounting taught at Capital University. Cost per section are as follows: Description Cost Professors $20,000 $4,000 $2,000 Classroom/building Teaching Assistants Notes Half of these costs can be avoided by laying off staff This space can not be used for other purposes All costs can be avoided As well, it is estimated that fixed administrative costs are $1,000 per section. BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000 Should Capital accept this special offer? (include both qualitative and quantitative analysis)

Question 2 Capital University, a midsized university in a capital city recently received an offer from BrainTrust Teaching Services to teach all of the first year accounting courses at the university. There are currently 10 sections of 1st year accounting taught at Capital University. Cost per section are as follows: Description Cost Professors $20,000 $4,000 $2,000 Classroom/building Teaching Assistants Notes Half of these costs can be avoided by laying off staff This space can not be used for other purposes All costs can be avoided As well, it is estimated that fixed administrative costs are $1,000 per section. BrainTrust has proposed that they can teach all of the sections for a total cost of $105,000 Should Capital accept this special offer? (include both qualitative and quantitative analysis)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Learning Objective Product Tango has revenue of $1,150,000, variable cost of goods sold of $850,000, variable selling expenses of $275,000, and fixed costs of $125,000, creating an operating loss of $(100,000). a. Prepare a differential analysis as of February 13 to determine if Product Tango should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue Product Tango (Alt. 1) or Discontinue Product Tango (Alt. 2) February 13 Revenues Costs: Variable cost of goods sold Variable selling and admin. expenses Fixed costs Profit (Loss) Continue Discontinue Product Product Tango Tango (Alternative 1) (Alternative 2) 1,150,000 0 -825,000 X -275,000 -125,000 100,000 X X X X X Differential Effects (Alternative 2) -1,150,000 850,000 275,000 0 -25,000 b. Determine if Product Tango should be continued (Alternative 1) or…
5. Ken Owens Construction specializes in small additions and repairs. His normal charge is $400/day plus materials. Due to his physical condition, David, an elderly gentleman, needs a downstairs room converted to a bathroom. Ken has produced a bid for $5000 to complete the bathroom. He did not provide David with the details of the bid. However, they are shown here. Chapter 10 Homework Ken's Bid Detail Dollars Direct material Direct labor Variable overhead Fixed overhead Profit $2,200 1,600 200 600 400 $5,000 A. The town's social services has asked Ken if he could reduce his bid to $4,000 Should Ken accept the counter offer? Current Bid New Bid Direct material Direct labor $2,200 $2,200 1,600 1,600 Variable overhead Fixed overhead Profit 200 200 600 400 $5,000 $4,000 B. How much would his income be reduced? C. If the town's social services guaranteed him another job next month at his normal price, could he accept this job at $4,000?
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Problem 1-47 (Algo) Cost Data for Managerial Purposes (LO 1-3) Langholm Bistro is a popular restaurant in a small, coastal village. Brian Langholm, who opened the restaurant five years ago, has seen It grow steadily. Currently, Langholm's is only open for dinner, but many of the regular customers have been asking Brian to consider opening for lunch as well. Brian has been talking to his accountant about the financial Impact of the expanded services on the overall business. He knew that the bistro did not make much money and he was concerned that the new business might be too risky. The accountant asked Brian for his best estimates of the impact of the new business on revenues and costs. He had been thinking about this for some time and estimated that revenues would grow by about 25 percent. Food costs would increase by about 40 percent and labor costs by about 25 percent. Rent on the bistro would not change, but utilities would increase by about 20 percent. Other costs would increase…
c03 Use target costing to analyze data (Learning Objective 2) See the Winter Sports Inc. data from S8-2. Assume that Winter Sports' reputation has diminished and other resorts in the vicinity are charging only $65 per lift ticket. Winter Sports has become a price-taker and won't be able to charge more than its competitors. At the market price, Winter Sports' managers believe they will still serve 750,000 skiers and snowboarders each season. 1. If Winter Sports can't reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Show your analysis. 2. Assume that Winter Sports has found ways to cut its fixed costs to $30 million. What is its new target variable cost per skier/snowboarder? Assume investors want to earn a 15% return on assets. Compare this to the current variable cost per skier/ snowboarder. Comment on your results.
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