Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Question
Chapter 8, Problem 8.23AE
1.
To determine
To prepare: An incremental analysis to show whether product line “Laminate Flooring” should drop or not.
2.
To determine
To prepare: An incremental analysis to show whether product line “Laminate Flooring” should drop or not if discontinuance results in avoidance of fixed cost by $32,000.
3.
To determine
Whether company should discontinue the laminate flooring if all fixed cost allocated to it is saved but there is decrease in sale of wooden flooring by 10%.
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Making decisions about dropping a product
Top managers of Video Avenue are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this decision:
Total fixed costs will not change if the company stops selling DVDs.
Requirements
Prepare a differential analysis to show Whether Video Avenue should drop the DVD Product fins.
Will dropping DVDs add $37,000 to operating income? Explain.
Directions: For each situation, select one option you think will help increase profit. Put the letter of your
choice in the blank. Below each answer, write your rationale. When you have finished, ask
your instructor for a copy of the answer guide to verify your responses.
A. Avoid extra payroll expenses.
B. Get the best rates on advertising.
C. Change the product you provide.
D. Use resources wisely.
E. Beat the competition.
F. Get the best rates on supplier purchases.
G. Eliminate some free services.
H. Increase worker e
iciency.
_1. A shop that sells fine glassware offers gift wrapping at no extra cost.
Rationale:
2. Two stores sell the same video game at the same price.
Rationale:
3. There are 12 places to buy the yarn needed for a knitting factory.
Rationale:
4. Employees at a printing company do not have a system for completing their tasks quickly
and accurately.
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5. At a sign-making company, the extra metal is discarded.
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Classifying quality costs and using these costs to make decisions
Loiselle manufactures high-quality speakers. Suppose Loiselle is considering spending the following amounts on a new quality program:
It also expects this program to avoid lost profits from the following:
Requirements
Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, or external failure).
Should Loiselle implement the quality program? Give your reasons.
Chapter 8 Solutions
Managerial Accounting (5th Edition)
Ch. 8 - Prob. 1QCCh. 8 - (Learning Objective 1) Keys to making short-term...Ch. 8 - (Learning Objective 2) Which is true of...Ch. 8 - (Learning Objective 3) Which of the following...Ch. 8 - Prob. 5QCCh. 8 - Prob. 6QCCh. 8 - (Learning Objective 4) A segment margin is the a....Ch. 8 - (Learning Objective 5) When resources are...Ch. 8 - (Learning Objective 6) Which of the following is...Ch. 8 - Prob. 10QC
Ch. 8 - Determine relevance of information (Learning...Ch. 8 - Prob. 8.2SECh. 8 - Prob. 8.3SECh. 8 - Prob. 8.4SECh. 8 - Prob. 8.5SECh. 8 - Prob. 8.6SECh. 8 - Prob. 8.7SECh. 8 - Prob. 8.8SECh. 8 - Product mix decision: Unlimited demand (Learning...Ch. 8 - Prob. 8.10SECh. 8 - Outsourcing production decision (Learning...Ch. 8 - Relevant information for outsourcing delivery...Ch. 8 - Prob. 8.13SECh. 8 - Prob. 8.14SECh. 8 - Prob. 8.15SECh. 8 - Determine relevant and irrelevant information...Ch. 8 - SUSTAINABILITY ES-17A Sustainability and...Ch. 8 - Prob. 8.18AECh. 8 - Prob. 8.19AECh. 8 - Analyze special order decision (Learning Objective...Ch. 8 - Prob. 8.21AECh. 8 - Prob. 8.22AECh. 8 - Prob. 8.23AECh. 8 - Discontinuing a product line (Learning Objective...Ch. 8 - Prob. 8.25AECh. 8 - Determine product mix for retailertwo stocking...Ch. 8 - Prob. 8.27AECh. 8 - Make-or-buy product component (Learning Objective...Ch. 8 - Prob. 8.29AECh. 8 - Prob. 8.30AECh. 8 - Prob. 8.31AECh. 8 - Prob. 8.32BECh. 8 - Prob. 8.33BECh. 8 - Prob. 8.34BECh. 8 - Prob. 8.35BECh. 8 - Prob. 8.36BECh. 8 - Prob. 8.37BECh. 8 - Prob. 8.38BECh. 8 - Prob. 8.39BECh. 8 - Prob. 8.40BECh. 8 - Identify constraint, then determine product mix...Ch. 8 - Determine product mix for retailertwo stocking...Ch. 8 - Prob. 8.43BECh. 8 - Prob. 8.44BECh. 8 - Prob. 8.45BECh. 8 - Determine maximum outsourcing price (Learning...Ch. 8 - Prob. 8.47BECh. 8 - Prob. 8.48APCh. 8 - Special order decision and considerations...Ch. 8 - Prepare and use contribution margin statements for...Ch. 8 - Product mix decision under constraint (Learning...Ch. 8 - Outsourcing decision given alternative use of...Ch. 8 - Prob. 8.53APCh. 8 - Prob. 8.54BPCh. 8 - Prob. 8.55BPCh. 8 - Prepare and use contribution margin statements for...Ch. 8 - Prob. 8.57BPCh. 8 - Prob. 8.58BPCh. 8 - Prob. 8.59BPCh. 8 - Decide whether to discontinue a department...Ch. 8 - Prob. 8.61ACTCh. 8 - Outsourcing Decision at a Real Company Go to the...Ch. 8 - Prob. 8.63ACTCh. 8 - Prob. 8.64ACT
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