管理会计(英文版)课后习题答案(高等教育出版社)chapter 17

管理会计（高等教育出版社）

于增彪（清华大学）改编

余绪缨（厦门大学）审校

CHAPTER 17 TACTICAL DECISION MAKING QUESTIONS FOR WRITING AND DISCUSSION

1. A tactical decision is short-run in nature; it

involves choosing among alternatives with an immediate or limited end in view. A stra-tegic decision involves selecting strategies that yield a long-term competitive advantage.

2.Depreciation is an allocation of a sunk cost.

This cost is a past cost and will never differ across alternatives.

3.The salary of a supervisor in an accept or

reject decision is an example of an irrelevant future cost.

4.If one alternative is to be judged superior to

another alternative on the basis of cash-flow comparisons, then cash flows must be ex-pressed as an annual amount (or periodic amount); otherwise, consideration must be given to the time value of the nonperiodic cash flows.

5.Disagree. Qualitative factors also have an

important bearing on the decision and may, at times, overrule the quantitative evidence from a relevant costing analysis.

6.The purchase of equipment needed to pro-

duce a special order is an example of a fixed cost that is relevant.

7.Relevant costs are those costs that differ

across alternatives. Differential costs are the differences between the costs of two alterna-tives.

8.Depreciation is a relevant cost whenever it is

a future cost that differs across alternatives.

Thus, it must involve a capital asset not yet

acquired.

9.Past costs can be used as information to

help predict future costs.

10.Yes. Suppose, for example, that sufficient

materials are on hand for producing a part

for two years. After two years, the part will be

replaced by a newly engineered part. If there

is no alternative use of the materials, then

the cost of the materials is a sunk cost and

not relevant in a make-or-buy decision.

https://www.360docs.net/doc/2e11767685.html,plementary effects may make it more

expensive to drop a product.

12. A manager can identify alternatives by using

his or her own knowledge and experience

and by obtaining input from others who are

familiar with the problem.

13.No. Joint costs are irrelevant. They occur

regardless of whether the product is sold at

the split-off point or processed further.

14.Yes. The incremental revenue is $1,400, and

the incremental cost is only $1,000, creating

a net benefit of $400.

15.Regardless of how many units are produced,

fixed costs remain the same. Thus, fixed

costs do not change as product mix

changes.

16.No. If a scarce resource is used in producing

the two products, then the product providing

the greatest contribution per unit of scarce

resource should be selected. For more than

one scarce resource, linear programming

may be used to select the optimal mix.

17.If a firm is operating below capacity, then a

price that is above variable costs will in-

crease profits.

18.Different prices can be quoted to customers

in markets not normally served, to noncom-

peting customers, and in a competitive bid-

ding setting.

19.Linear programming is used to select the

optimal product mix whenever there are mul-

tiple constrained scarce resources.

20.An objective function is the function that is to

be maximized (or minimized) subject to a set

of constraints. A constraint is simply a func-

tion that restricts the possible values of va-

riables appearing in the objective function.

Usually, a constraint is concerned with a

scarce resource. A constraint set is the col-

lection of all constraints for a given problem.

21. A feasible solution is a solution to a linear

programming problem that satisfies the

prob lem’s constraints. The feasible set of

solutions is the collection of all feasible solu-

tions.

22.To solve a linear programming problem

graphically, use the following four steps: (1) graph each constraint, (2) identify the feasi-ble set of solutions, (3) identify all corner points in the feasible set, and (4) select the corner point that yields the optimal value for the objective function. Typically, when a li-near programming problem has more than two or three products, the simplex method must be used.

EXERCISES

17–1

The correct order is: D, E, B, F, C, A.

17–2

Steps in A ustin’s decision:

Step 1: Define the problem. The problem is whether to continue studying at his present university, or to study at a university with a nationally recog-

nized engineering program.

Step 2: Identify the alternatives. Events A and B. (Students may want to include event I—possible study for a graduate degree. However, future events

indicate that Austin still defined his problem as in Step 1 above.)

Step 3: Identify costs and benefits associated with each feasible alternative.

Events C, E, F, and I. (Students may also list E and F in Step 5—they are

included here because they may help Austin estimate future income

benefits.)

Step 4: Total relevant costs and benefits for each feasible alternative. No specif-ic event is listed for this step, although we can intuit that it was done,

and that three schools were selected as feasible since event J mentions

that two of three applications met with success.

Step 5: Assess qualitative factors. Events D, E, F, G, and H.

Step 6: Make the decision. Event J is certainly relevant to this. (What did Austin ultimately decide? The author doesn’t know—at the time this text was

published, Austin was still deciding. We certainly wish him luck!)

1. The two alternatives are to make the component in house or to buy it from

Couples.

2. Alternatives Differential

Make Buy Cost to Make Direct materials $ 5.00 —$ 5.00 Direct labor 2.38 — 2.38 Variable overhead 1.90 — 1.90 Purchase cost —$11.00 (11.00) Total relevant cost $ 9.28 $11.00 $ (1.72) Pierre should make the component in house because it will save $9,116 ($1.72 5,300) over purchasing it from Couples.

17–4

1. If Product C is dropped, profit will decrease by $15,000 since the avoidable

direct fixed costs are only $45,000 ($70,000 – $25,000). Depreciation is not re-levant.

2. A new income statement, assuming that C is dropped and demand for B de-

creases by 10 percent, is given below (amounts are in thousands).

A B Total

Sales revenue $800 $1,755 $2,555

Less: Variable expenses 350 900 1,250

Contribution margin $450 $ 855 $1,305

Less: Direct fixed expenses 150 300 450

Segment margin $300 $ 555 $ 855

Less: Common fixed expenses 340 Operating income $ 515 Operating income will decrease by $85,000 ($600,000 – $515,000).

1. Relevant manufacturing costs are $6.90 per unit ($

2.00 + $

3.10 + $1.80), so the

gross profit per unit from the special order is $0.60 ($7.50 –$6.90). The in-crease in gross profit is $2,280 (3,800 $0.60).

2. Again, the relevant manufacturing costs are $6.90 per unit. The increase in

gross profit is $2,280, from which the $1,000 of packing capacity must be subtracted. The overall effect is to increase profit by $1,280 if the special or-der is accepted.

17–6

1. The amounts Heather has spent on purchasing and improving the Grand Am

are irrelevant because these are sunk costs.

2. Alternatives

Restore Grand Am Buy Neon Transmission $2,000

Water pump 400

Master cylinder 1,100

Sell Grand Am —$(6,400)

Cost of new car —9,400 Total $3,500 $ 3,000 Heather should sell the Grand Am and buy the Neon because it provides a net savings of $500.

Note: Heather should consider the qualitative factors. If she restored the Grand Am, how much longer would it last? What about increased license fees and insurance on the newer car? Could she remove the stereo and put it in the Neon without decreasing the Grand Am’s resale value by much?

1. Make Buy

Direct materials $360,000 —

Direct labor 120,000 —

Variable overhead 100,000 —

Fixed overhead 88,000 —

Purchase cost —$640,000 ($16 ? 40,000) Total relevant costs $668,000 $640,000

Sherwood should purchase the part.

2. Maximum price = $668,000/40,000 = $16.70 per unit

3. Income would increase by $28,000 ($668,000 – $640,000).

17–8

1. Make Buy

Direct materials $360,000 —

Direct labor 120,000 —

Variable overhead 100,000 —

Purchase cost —$640,000 ($16 ? 40,000) Total relevant costs $580,000 $640,000

Sherwood should continue manufacturing the part.

2. Maximum price = $580,000/40,000 = $14.50 per unit

3. Income would decrease by $60,000 ($640,000 – $580,000).

1. Make Buy

Direct materials $30.00 —

Direct labor 26.60 —

Variable overhead 6.40 —

Purchase cost —$65

Total relevant costs $63.00 $65 Income would decrease by $180,000 [($65 – $63) ? 90,000].

2. Make Buy

Var. manu. costs (90,000 ? $63) $ 5,670,000 —

Materials handling (3,000 ? $25) 75,000 —

Purchasing (4,000 ? $17) 68,000 —

Setups (800 ? $200) 160,000 —

Engineering (1,000 ? $90) 90,000 —

Maintenance (7,000 ? $4) 28,000 —

Purchase cost (90,000 ? $65) —$5,850,000 Total relevant costs $ 6,091,000 $5,850,000 Income would increase by $241,000 ($6,091,000 – $5,850,000).

1. Product B Total

Sales $ 100,000 $ 250,000 $ 350,000 Less: Variable expenses 50,000 145,000 195,000 Contribution margin $ 50,000 $ 105,000 $ 155,000 Less: Direct fixed expenses* 60,000 60,000 120,000 Segment margin $ (10,000) $ 45,000 $ 35,000 Less: Common fixed expenses 70,000 Operating (loss) $ (35,000) *Product A: $100,000/$350,000 ? $70,000 = $20,000;

$80,000 – $20,000 = $60,000

Product B: $250,000/$350,000 ? $70,000 = $50,000;

$110,000 – $50,000 = $60,000

2. Alternatives:

Keep Drop Drop A/ Drop B/

Both Both Keep B Keep A Sales $ 350,000 —$ 312,500 $ 150,000 Less: Variable expenses 195,000 —181,250 75,000 Contribution margin $ 155,000 —$ 131,250 $ 75,000 Less: Direct fixed expenses 120,000 —60,000 60,000 Segment margin $ 35,000 —$ 71,250 $ 15,000 Less: Common fixed expenses 70,000 $ 70,000 70,000 70,000 Operating income (loss) $ (35,000) $ (70,000) $ 1,250 $ (55,000) Gutierrez should drop Product A unless the common fixed expenses can be avoided if both products are dropped.

1. The company should not accept the offer because the additional revenue is

less than the additional costs (assuming fixed overhead is allocated and will not increase with the special order):

Incremental revenue per calendar $4.20

Incremental cost per calendar 4.25

Loss per calendar $0.05

Total loss: $0.05 ? 5,000 = $250

2. Costs associated with the layoff:

Increase state UI premiums (0.01 ? $1,460,000) $14,600

Notification costs ($25 ? 20) 500

Rehiring and retraining costs ($150 ? 20) 3,000 Total $18,100 The order should be accepted. The loss of $250 on the order is more than off-set by the $18,100 saved by not laying off employees.

17–12

1. Sales $ 293,000

Costs 264,000

Operating profit $ 29,000

2. Sell Process Further Difference

Revenues $40,000 $73,700 $33,700 Further processing cost 0 23,900 23,900 Operating income $49,800 $ 9,800 The company should process Delta further, because operating profit would increase by $9,800 if it were processed further. (Note: Joint costs are irrele-vant to this decision, because the company will incur them whether or not Delta is processed further.)

1. ($30 ? 2,000) + ($60 ? 4,000) = $300,000

2. Hera

Contribution margin $30 $60

÷ Pounds of material ÷2 ÷5

Contribution margin/pound $15 $12

Norton should make as much of Juno as can be sold, then make Hera.

2,000 units of Juno ? 2 = 4,000 pounds

16,000 pounds – 4,000 pounds = 12,000 pounds for Hera

Hera production = 12,000/5 = 2,400 units

Product mix is 2,000 Juno and 2,400 Hera.

Total contribution margin = (2,000 ? $30) + (2,400 ? $60)

= $204,000

17–14

1. Let X = Number of Product A produced

Let Y = Number of Product B produced

Maximize Z = $30X + $60Y (objective function)

2X + 5Y ≤ 6,000 (direct material constraint)

3X + 2Y ≤ 6,000 (direct labor constraint)

X ≤ 1,000

Y ≤ 2,000

X ≥ 0

Y ≥ 0

17–14 Concluded

2.

A

X

0 1,000 2,000 3,000

Solution: The corner points are the origin, the points where X = 0, Y = 0, and where two linear constraints intersect. The point of intersection of the two li-near constraints is obtained by solving the two equations simultaneously.

A 0 0 $ 0

B 1,000 0 30,000

C 1,000 800 78,000*

D 0 1,200 72,000

*The values for X and Y are found by solving the simultaneous equations:

X = 1,000

2X + 5Y = 6,000

2(1,000) + 5Y = 6,000

Y = 800

Z = $30(1,000) + $60(800) = $78,000

Optimal solution: X = 1,000 units and Y = 800 units

3. At the optimal level, the contribution margin is $78,000.

Alternatives

Relevant Item Keep Buy Revenues $ 10,000,000 $12,000,000

Note savings 0 16,500 Operating costs (63,000) (50,000) Maintenance (8,500) (4,000) Net recurring benefit $ 9,928,500 $11,962,500

One-time cash outflow —$(540,000)

The relevant items include both recurring and nonrecurring items. The decision to keep or buy must include the opportunity cost of the one-time outlay of $540,000. Since the opportunity cost is likely to be much less than the difference between the recurring benefits, the buy alternative appears to be superior. While net present value analysis is the best framework for this problem, it is useful to identify relevant items.

17–16

1. Process Differential Amount

Sell Further to Process Further Revenues $24,000 $42,000 $18,000

Processing cost —(7,150) (7,150) Total $34,850 $10,850 Pyrol should be processed further as it will increase profit by $10,850 for every 1,000 liters.

2. Process Differential Amount

Sell Further to Process Further Revenues $24,000 $42,000 $ 18,000

Processing cost —(7,150) (7,150)

Distribution cost —(800) (800)

Commissions —(4,200) (4,200) Total $29,850 $ 5,850 Pyrol should be processed further as it will increase profit by $5,850 for every 1,000 liters. Note that the liability issue was not quantified, so that it would need to be considered as a qualitative factor—possibly reducing the attrac-tiveness of making pyrolase.

1. Model M-3

Contribution margin $24 $ 15

÷ Hours on lathe ÷ 6 ÷ 3

Contribution margin/hours on lathe $ 4 $ 5

Model M-3 has the higher contribution margin per hour of drilling machine use, so all 12,000 hours should be spent producing it. If that is done, 4,000 (12,000 hours/3 hours per unit) units of Model M-3 should be produced. Zero units of Model A-4 should be produced.

2. If only 2,500 units of Model M-3 can be sold, then 2,500 units should be pro-

duced. This will take 7,500 hours of drilling machine time. The remaining 4,500 hours should be spent producing 750 (4,500/6) units of Model A-4.

17–18

1. Model 14-D

Contribution margin $ 12 $ 10

÷ Hours on lathe ÷ 4 ÷ 2

Contribution margin/hours on lathe $ 3 $ 5

Model 33-P has the higher contribution margin per hour of lathe use, so all 12,000 hours should be spent producing it. If that is done, 6,000 (12,000 hours/2 hours per unit) units of Model 33-P should be produced. Zero units of Model 14-D should be produced.

2. If only 5,000 units of Model 33-P can be sold, then 5,000 units should be pro-

duced. This will take 10,000 hours of lathe time. The remaining 2,000 hours should be spent producing 500 (2,000/4) units of Model 14-D.

17–19

1. Let X = Number of Model 14-D produced

Let Y = Number of Model 33-P produced

Maximize Z = $12X + $10Y (objective function)

4X + 2Y ≤ 12,000 (lathe constraint)

X ≤ 2,000 (demand constraint)

Y ≤ 5,000 (demand constraint)

X ≥ 0

Y ≥ 0

2.

X

0 1,000 2,000 3,000 4,000 5,000

Solution: The corner points are points A, B, C, D, and E. The point of intersec-tion of the linear constraints is obtained by solving the two equations simul-taneously.

Corner Point X-Value Y-Value Z = $12X + $10Y

A 0 0 $ 0

B 0 5,000 50,000

C 500 5,000 56,000

D 2,000 2,000 44,000

E 2,000 0 24,000

*The intersection values for X and Y can be found by solving the simultane-ous equations:

Corner Point C:

Y = 5,000

4X + 2Y = 12,000

4X + 2(5,000) = 12,000

4X = 2,000

X = 500

Z = $12(500) + $10(5,000) = $56,000

Corner Point D:

X = 2,000

4X + 2Y = 12,000

4(2,000) + 2Y = 12,000

2Y = 4,000

Y = 2,000

Z = $12(2,000) + $10(2,000) = $44,000

Optimal solution is Point C, where X = 500 units and Y = 5,000 units.

3. At the optimal level, the contribution margin is $56,000.

17–20

1. COGS + Markup(COGS) = Sales

$144,300 + Markup($144,300) = $206,349

Markup($144,300) = $206,349 – $144,300

Markup = $62,049/$144,300

Markup = 0.43, or 43%

2. Direct materials $ 800

Direct labor 1,600

Overhead 3,200

Total cost $ 5,600

Add: Markup 2,408

Initial bid $ 8,008

17–21

1. Standard Deluxe

Price $ 9.00 $30.00 $35.00 Variable cost 6.00 20.00 10.00 Contribution margin $ 3.00 $10.00 $25.00 ÷ Machine hours ÷0.10 ÷0.50 ÷0.75 Contribution margin/MHr. $30.00 $20.00 $33.33 The company should sell only the deluxe unit with contribution margin per machine hour of $33.33. Sealing can produce 20,000 (15,000/0.75) deluxe units per year. These 20,000 units, multiplied by the $25 contribution margin per unit, would yield total contribution margin of $500,000.

2. Produce and sell 12,000 deluxe units, which would use 9,000 machine hours.

Then, produce and sell 50,000 basic units, which would use 5,000 machine hours. Then produce and sell 2,000 standard units, which would use the re-maining 1,000 machine hours.

Total contribution margin = ($25 ? 12,000) + ($3 ? 50,000) + ($10 ? 2,000)

= $470,000

17–22

1. d

2. a

3. d

4. c

5. b

6. b

PROBLEMS

17–23

1. Costs for Two Years

Site 1 Site 2 Site 3 Rent $11,400 $12,000 —

Partitions 2,040 1,500 —

Renovation ——$15,000 Total $13,440 $13,500 $15,000

Costs for Three Years

Site 1 Site 2 Site 3 Rent $17,100 $18,000 —

Partitions 3,060 1,500 —

Renovation ——$15,000 Total $20,160 $19,500 $15,000 Yes, it matters. If the center exists for two years, then Site 1 is least expen-sive. If the center exists for three years, Site 3 is least expensive.

2. MEMORANDUM

TO: Alice Knapp

FROM: Site Consultant

RE: New Location for the Center

Three sites are under serious consideration for the center’s location. Quant i-tatively, the sites are ranked as follows:

Two Years Three Years

Site 1 = $13,440 Site 3 = $15,000

Site 2 = $13,500 Site 2 = $19,500

Site 3 = $15,000 Site 1 = $20,160 Clearly, it is important for you to determine whether the Center will continue to serve the people of Newkirk for two more years or for three more years.

17–23 Concluded

Qualitative factors are also important and are discussed for each site in turn.

Site 1: The location of this site is a good one for the center because it is cen-trally located and will be convenient for clients. Neighbors include an attor-ney, two insurance agencies, and a bail bond agency. These businesses can be expected to accept the Drug Counseling Center readily. However, the space is somewhat smaller than the other sites, and total privacy for client and counselor cannot be ensured.

Site 2: This site is convenient to ca seworkers’ homes. However, it is som e-what less convenient for clients. Additionally, some stores in the mall may resent the location of a drug counseling center and fight to block your mov-ing in. While you would no doubt eventually win any legal battles, the poten-tial legal action would require time and money. The space provided by Site 2 is ideal for the center’s purposes. Client privacy would be ensured. Private o f-fice space exists for administrative needs.

Site 3: Considerably more space is provided by Site 3 than by the other sites.

Currently, however, it is virtually unusable. It will take time to complete the renovation. During that time period, the center may have to cancel client ap-pointments and/or operate out of temporary quarters (e.g., the courthouse).

1. Make Buy

Direct materials$218,000 —

Direct labor b70,200 —

Variable overhead c20,800 —

Fixed overhead d58,000 —

Purchase cost e—$340,000

Total $367,000 $340,000

a($70 ? 2,000) + ($130 ? 600)

b$27 ? 2,600

c$8 ? 2,600

d$26,000 + $32,000

e($125 ? 2,000) + ($150 ? 600)

Net savings by purchasing: $27,000. Hetrick should purchase the crowns ra-ther than make them.

2. Qualitative factors that Hetrick should consider include quality of crowns, re-

liability and promptness of producer, and reduction of workforce.

3. It reduces the cost of making the crowns to $335,000, which is less than the

cost of buying.

4. Make Buy

Direct materials $316,000 —

Direct labor 108,000 —

Variable overhead 32,000 —

Fixed overhead 58,000 —

Purchase cost —$515,000

Total $514,000 $515,000

Hetrick should produce its own crowns if demand increases to this level be-cause the fixed overhead is spread over more units.