Accept Special Offer: Usually the acceptance of special offers by the business aims at utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated. To Determine: The operating income per megawatt hour for industrial customers of Company VP.

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Answer 1

Question

Chapter 24, Problem 2ADM

(a)

To determine

Accept Special Offer: Usually the acceptance of special offers by the business aims at

utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated.

To Determine: The operating income per megawatt hour for industrial customers of Company VP.

(b)

To determine

The contribution margin per megawatt hour for industrial customers of Company VP.

c)

To determine

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

(d)

To determine

To Enlist: The implications in offering a discounted off-peak price to the new customer.

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ABF's metal spare parts manufacturing company uses the customised production method by attributing the GST to the products it produces with the help of predetermined attribution coefficients. The processing of metal parts is carried out in two production departments: the Cutting and Drilling department, and the Assembly department. The GIS attribution coefficients for the two departments are based on the operating hours of machines and the cost of direct work respectively. At the beginning of the year, the following budgets were implemented: Cutting and Drilling Department Assembly Department Direct Labor Costs (in euros) 1.320.000 2.000.000 G.B.E. (in euros) 4.800.000 2.400.000 Machinery Operating Hours 80.000 5.000 Direct Work Hours 27.000 12.000 Requested: To calculate the coefficient of attribution of the General Secretariat that will be used in each department. (4 units) To determine the production cost per unit for order 158 which…

Answer 2

Question

Chapter 24, Problem 2ADM

(a)

To determine

Accept Special Offer: Usually the acceptance of special offers by the business aims at

utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated.

To Determine: The operating income per megawatt hour for industrial customers of Company VP.

(b)

To determine

The contribution margin per megawatt hour for industrial customers of Company VP.

c)

To determine

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

(d)

To determine

To Enlist: The implications in offering a discounted off-peak price to the new customer.

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Answer 3

Question

Chapter 24, Problem 2ADM

(a)

To determine

Accept Special Offer: Usually the acceptance of special offers by the business aims at

utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated.

To Determine: The operating income per megawatt hour for industrial customers of Company VP.

(b)

To determine

The contribution margin per megawatt hour for industrial customers of Company VP.

c)

To determine

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

(d)

To determine

To Enlist: The implications in offering a discounted off-peak price to the new customer.

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Answer 4

Question

Chapter 24, Problem 2ADM

(a)

To determine

Accept Special Offer: Usually the acceptance of special offers by the business aims at

utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated.

To Determine: The operating income per megawatt hour for industrial customers of Company VP.

(b)

To determine

The contribution margin per megawatt hour for industrial customers of Company VP.

c)

To determine

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

(d)

To determine

To Enlist: The implications in offering a discounted off-peak price to the new customer.

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Answer 5

Chapter 24, Problem 2ADM

(a)

To determine

Accept Special Offer: Usually the acceptance of special offers by the business aims at

utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated.

To Determine: The operating income per megawatt hour for industrial customers of Company VP.

(b)

To determine

The contribution margin per megawatt hour for industrial customers of Company VP.

c)

To determine

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

(d)

To determine

To Enlist: The implications in offering a discounted off-peak price to the new customer.

Answer 6

Chapter 24, Problem 2ADM

(a)

To determine

Accept Special Offer: Usually the acceptance of special offers by the business aims at

utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated.

To Determine: The operating income per megawatt hour for industrial customers of Company VP.

Answer 7

Chapter 24, Problem 2ADM

(a)

To determine

Accept Special Offer: Usually the acceptance of special offers by the business aims at

utilizing the unused capacity of a business, so that the costs get reduced (as fixed costs are neglected) and additional revenue is generated.

To Determine: The operating income per megawatt hour for industrial customers of Company VP.

Answer 8

(b)

To determine

The contribution margin per megawatt hour for industrial customers of Company VP.

Answer 9

(b)

To determine

The contribution margin per megawatt hour for industrial customers of Company VP.

Answer 10

c)

To determine

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

Answer 11

c)

To determine

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

Answer 12

(d)

To determine

To Enlist: The implications in offering a discounted off-peak price to the new customer.

Answer 13

(d)

To determine

To Enlist: The implications in offering a discounted off-peak price to the new customer.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 24 - Explain the meaning of (A) differential revenue,...Ch. 24 - A company could sell a building for 250,000 or...Ch. 24 - A chemical company has a commodity-grade and...Ch. 24 - A company accepts incremental business at a...Ch. 24 - Prob. 5DQ Ch. 24 - Prob. 6DQ Ch. 24 - In the long run, the normal selling price must he...Ch. 24 - Although the cost-plus approach to product pricing...Ch. 24 - Prob. 9DQ Ch. 24 - What is the appropriate measure of a products...

Solution Summary: The author explains how to determine the operating income per megawatt hour for industrial customers of Company VP.

The contribution margin per megawatt hour for industrial customers of Company VP.

To Calculate: The lowest price per kilowatt hour that Company VP, could offer during off-peak hours and maintain a positive contribution margin.

To Enlist: The implications in offering a discounted off-peak price to the new customer.

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Chapter 24 Solutions