COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
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Chapter 11, Problem 11.27E
Relevant costs, contribution margin, product emphasis. The Beach Comber is a take-out food store at a popular beach resort. Sara Miller, owner of the Beach Comber, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows:
Miller has a maximum front shelf space of 12 feet to devote to the four drinks. She wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink.
- 1. Calculate the contribution margin per case of each type of drink.
- 2. A coworker of Miller’s recommends that she maximize the shelf space devoted to those drinks with the highest contribution margin per case. Do you agree with this recommendation? Explain briefly.
- 3. What shelf-space allocation for the four drinks would you recommend for the Beach Comber? Show your calculations.
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The Wave Crave is a take-out food store at a popular beach resort. Cindy Smith, owner of the Wave Crave, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows:
E (Click to view the data.)
Smith has a maximum front shelf space of 12 feet to devote to the four drinks. She wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink.
Read the requirements
- X
Data table
Requirement 1. Calculate the contribution margin per case of each type of drink.
Natural
Natural
Cola
Lemonade
Punch
Orange Juice
Cola
Lemonade
Punch
Orange Juice
Selling price per case
19.25 $
19.50 $
27.30 $
38.75
Selling price per case
19.25 S
19.50 $
27.30 $
38.75
14.00
15.60
20.70
29.90
Variable cost per case
Variable cost per case
%24
14.00 S
15.60 $
20.70 $
29.90
Contribution margin per case
Cases sold per foot of shelf space per day
22
25
23
Requirements
Print
Done
1. Calculate the contribution margin per case of each…
The Seashore Stand is a take-out food store at a popular beach resort. Cindy Smith, owner of the Seashore Stand, is deciding how much refrigerator space to devote to four different drinks. Pertinent data on these four drinks are as follows:
(Click to view the data.)
Sexton has a maximum front shelf space of 12 feet to devote to the four drinks. She wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink.
Read the requirements.
Requirement 1. Calculate the contribution margin per case of each type of drink.
Cola
$
Cola
Lemonade
Punch
Natural Orange Juice
Total
Selling price per case
Variable cost per case
Contribution margin per case
Requirement 2. A coworker of Sexton's recommends that she maximize the shelf space devoted to those drinks with the highest contribution margin per case. Do you agree with this recommendation? Explain briefly.
Feet of
Shelf Space
Lemonade
19.25 $
13.80
Cola
20.60 $
16.90
Punch
A. This recommendation makes sense. It will allow…
What shelf-space allocation for the four drinks would you recommend for the Beach Comber? Show your calculations.
Chapter 11 Solutions
COST ACCOUNTING
Ch. 11 - Prob. 11.1QCh. 11 - Define relevant costs. Why are historical costs...Ch. 11 - All future costs are relevant. Do you agree? Why?Ch. 11 - Distinguish between quantitative and qualitative...Ch. 11 - Describe two potential problems that should be...Ch. 11 - Variable costs are always relevant, and fixed...Ch. 11 - A component part should be purchased whenever the...Ch. 11 - Prob. 11.8QCh. 11 - Managers should always buy inventory in quantities...Ch. 11 - Management should always maximize sales of the...
Ch. 11 - Prob. 11.11QCh. 11 - Cost written off as depreciation on equipment...Ch. 11 - Managers will always choose the alternative that...Ch. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Qualitative and quantitative factors. Which of the...Ch. 11 - Special order, opportunity cost. Chade Corp. is...Ch. 11 - Prob. 11.18MCQCh. 11 - Keep or drop a business segment. Lees Corp. is...Ch. 11 - Relevant costs. Ace Cleaning Service is...Ch. 11 - Disposal of assets. Answer the following...Ch. 11 - Relevant and irrelevant costs. Answer the...Ch. 11 - Multiple choice. (CPA) Choose the best answer. 1....Ch. 11 - Special order, activity-based costing. (CMA,...Ch. 11 - Make versus buy, activity-based costing. The...Ch. 11 - Inventory decision, opportunity costs. Best Trim,...Ch. 11 - Relevant costs, contribution margin, product...Ch. 11 - Selection of most profitable product. Body Image,...Ch. 11 - Theory of constraints, throughput margin, relevant...Ch. 11 - Closing and opening stores. Sanchez Corporation...Ch. 11 - Prob. 11.31ECh. 11 - Relevance of equipment costs. Janets Bakery is...Ch. 11 - Equipment upgrade versus replacement. (A. Spero,...Ch. 11 - Special order, short-run pricing. Diamond...Ch. 11 - Short-run pricing, capacity constraints. Fashion...Ch. 11 - International outsourcing. Riverside Clippers Corp...Ch. 11 - Relevant costs, opportunity costs. Gavin Martin,...Ch. 11 - Opportunity costs and relevant costs. Jason Wu...Ch. 11 - Opportunity costs. (H. Schaefer, adapted) The Wild...Ch. 11 - Make or buy, unknown level of volume. (A....Ch. 11 - Make versus buy, activity-based costing,...Ch. 11 - Prob. 11.42PCh. 11 - Product mix, special order. (N. Melumad, adapted)...Ch. 11 - Theory of constraints, throughput margin, and...Ch. 11 - Theory of constraints, contribution margin,...Ch. 11 - Closing down divisions. Ainsley Corporation has...Ch. 11 - Dropping a product line, selling more tours....Ch. 11 - Prob. 11.48PCh. 11 - Dropping a customer, activity-based costing,...Ch. 11 - Equipment replacement decisions and performance...
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