Management Accounting
6th Edition
ISBN: 9780137024971
Author: Robert S. Kaplan, Anthony A. Atk...
Publisher: Pearson College Div
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Chapter 3, Problem 15Q
To determine
Provide an example of a fixed cost that would be relevant to a make-or-buy decision, and an example that would not be relevant to such decision.
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Carichem Company produces sanitation products after processing specialized chemicals. The following relates to its activities: 1 Kilogram of chemicals purchased for $4000 and with an additional $2000 is processed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, a gram of Crystal can be sold for $2 and the Cleaning agent can be sold for $8 per litre. At an additional cost of $800, Carichem can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $4 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $600 and made into 200 packs of Softener that can be sold for $4 per pack. Required: 1. Allocate the joint cost to the Detergent and the Softener using the following: a. Sales value at split-off method b. NRV method 2. Should Carichem have processed each of the products further? What effect does the allocation method have on this decision?
General accounting
Chapter 3 Solutions
Management Accounting
Ch. 3 - Prob. 1QCh. 3 - Explain the difference between variable costs and...Ch. 3 - What does the term contribution margin per unit...Ch. 3 - Prob. 4QCh. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Prob. 8QCh. 3 - Why should decision makers focus only on the...Ch. 3 - Prob. 10Q
Ch. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - Are avoidable costs relevant? Explain.
Ch. 3 - Provide an example of a fixed cost that would be...Ch. 3 - Prob. 16QCh. 3 - Prob. 17QCh. 3 - In analyzing whether to drop a product or...Ch. 3 - Prob. 19QCh. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - Prob. 22QCh. 3 - Classification of variable and fixed costs...Ch. 3 - Prob. 24ECh. 3 - Prob. 25ECh. 3 - Prob. 26ECh. 3 - Prob. 27ECh. 3 - Prob. 28ECh. 3 - Prob. 29ECh. 3 - Prob. 30ECh. 3 - Prob. 31ECh. 3 - Pricing and impact on demand Andrea Kimball has...Ch. 3 - Prob. 33ECh. 3 - Relevant and stink costs Don Baxter’s 6-year-old...Ch. 3 - Prob. 35ECh. 3 - Prob. 36ECh. 3 - Prob. 37ECh. 3 - Make-or-buy and relevant costs The assembly...Ch. 3 - Prob. 39ECh. 3 - Prob. 40ECh. 3 - Make-or-buy, relevant costs, and opportunity cost...Ch. 3 - Prob. 42ECh. 3 - Prob. 43ECh. 3 - Prob. 44ECh. 3 - Prob. 45ECh. 3 - Prob. 46ECh. 3 - Shelf mix decision Superstore is a large discount...Ch. 3 - Prob. 48ECh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Cost behavior and decisions Second City Airlines...Ch. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Outsourcing and ethics Hollenberry, Inc., is a...Ch. 3 - Prob. 63PCh. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Prob. 69CCh. 3 - Prob. 71C
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Relevant Costing Explained; Author: Kaplan UK;https://www.youtube.com/watch?v=hnsh3hlJAkI;License: Standard Youtube License