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Concept explainers
Apple offers extended service contracts that provide repair coverage for its products. As you complete the following requirements, assume that Apple’s repair services department uses many of the company’s existing resources such as its facilities, repair machinery, and computer systems.
Required
1.Identify several of the variable, mixed, and fixed costs that Apple’s repair services department is likely to incur in carrying out its services.
2.Assume that Apple’s repair service revenues are expected to grow by 25% in the next year. How would we expected the costs identified in part 1 to change, if at all?
3.Based on the answer part 2, can Apple use the contribution margin ratio to predict how income will change in response to increase in Apple’s repair service revenues?
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Chapter 18 Solutions
Loose-Leaf for Financial and Managerial Accounting
- McCarty Associates is a construction engineering firm that prepares detailed construction drawings for single-family homes. The market for this service is very competitive. To compete successfully McCarty must deliver quality service at low cost. McCarty presents the following data for 2019 and 2020. (Click the icon to view the data.) Engineering labor-hour costs are variable costs. Engineering support costs for each year depend on the engineering support capacity that McCarty chooses to maintain each year (that is, the number of jobs it can do each year). Engineering support costs do not vary with the actual number of jobs done in a year. Read the requirements. Requirement 1. Calculate the amount and cost of unused engineering support capacity at the beginning of 2020, based on the number of jobs actually done in 2020. The amount unused capacity is jobs and the cost of unused capacity is Requirement 2. Suppose McCarty can add or reduce its engineering support capacity in increments of…arrow_forwardI need the answer as soon as possiblearrow_forwardI need the answer as soon as possiblearrow_forward
- Please I requested to solve all the subparts of this question , I have remain with the last posting , I do not have more posting , please pleasearrow_forwardJordan Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs Allocated facility-level costs $ 5,700 6,800 3,900 8,100 27,200 One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Jordan for $2.90 each. Required a. Calculate the total relevant cost. Should Jordan continue to make the containers? b. Jordan could lease the space it currently uses in the manufacturing process. If leasing would produce $12.300 per rhonth, calculate the total avoidable costs. Should Jordan continue to make the containers? a. Total relevant cost Should Jordan continue to make the containers? b. Total avoidable cost Should Jordan continue to make the containers?arrow_forwardBorges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM) The cost data follow General Purpose Equipment (GPE) Flexible Manufacturing System (FMS) 75,000 $125,000 $15.00 Annual contracted units Annual fixed cost Per unit vanable cost Based on the total cost, the process that is best suited for the current contracted volume is Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Suppose the contracted volume changes to 375,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Dedicated Machine (DM) 75,000 $225,000 $14.00…arrow_forward
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- Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
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