Homework Answers
Case Ist when selling price 75 then profit and loss calculation
Total sales (4000×75) = $300,000
Total cost calculation
Material cost (4000×52) = 208,000
machinist paid (4000×44/4)= 44000
Total variable cost: $252,000
Add
Fixed manufacturing cost. =5,000
Fixed non manf. Cost = 11000
total cost for 4,000 set. $268,000
Gain or loss when sales at $75
Total sales. 300,000
Less cost: 268000
Total Gain. $32,000
Calculation of gain or loss when competition entered and prices set $66 per set
Now total sales(4,000×66) : 264,000
Less variable cost: 252,000
Contributions of margin 12,000
Less fixed cost. 16000
Net loss due to completion : $4,000
loss per unit 4,000 / 4000 =$1/unit
Gimble bear a loss $1 per unit .but he still recovers manufacturing expense. Loss of fixed cost so Gimble meet this price because he meet manufacture expense but he has not profit on this price.
net loss per unit =1$
Net profit or loss when 8500 spring set sold at 66 per unit
Net sales (66×8500) : $ 561,000
Less
Material cost(52×8500) $442,000
Machinist cost (85,00×44/4): $93,500
Fixed manufacturing cost. $5,000
Fixed non manufacturing cost: 11000
Total Gain. $ 9,500
Profit pet unit :9500/8500 = $1.118per unit
...
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question is what makes the approach of solving in each one not the
same. Why does one calculation include avoidable traceable cost
while the other doesn't?
2nd Problem:
(2400000)= segment margin lost
1800000=savings in traceable fix cost due to discontinuation of
beta
765000=Additional contribution margin
*West Region has Traceable costs that should be
avoidable according to segment statement
so again why for the Diego company problem, 250000 in
avoidable Traceable...
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