+1-415-670-9189
info@expertsmind.com
Relevant costs and benefits
Course:- Managerial Accounting
Reference No.:- EM1347976




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Managerial Accounting

1. Vernazza Pizza's owner bought his current pizza oven four years ago for $10,000 and it has one more year of life remaining. He is using straight-line depreciation for the oven. He could purchase a new oven for $1,400 but it would last only one year. The owner figures the new oven would save him $1,500 in annual operating expenses compared to operating the old one. Consequently, he has decided against buying the new oven, since doing so would results in a "loss of $500 over the next year.

a. How do you suppose the owner came up with $500 as the loss for the next year if the new pizza oven were purchased? Explain.

b. Criticize the owner's analysis and decision.

c. Prepare a correct analysis of the owner's decision.

2. lamont industries produces chemicals for the swimming pool industry. In one joint process, 10,000 liters of GSX are processed into 7,000 liters of xenolite and 3,000 liters of banolide. The cost of the joint process, including the GSX is $19,000. The firm allocates $13,300 of the joint cost to the xenolite and $5,700 of the cost to the banolide. The 3,000 liters of banolide can be sold at the split-off point for $2,500 or be processed further into a product called kitrocide. The sales value of 3,000 liters of kitrocide is $10,000 and the additional processing cost is $8,100.

Lamont's president has asked your consulting firm to make a recommendation as to whether the banolide should be sold at the split-off point or processed further. Write a letter providing an analysis and a recommendation.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
USE SunRype and Welches which are provided for you as a Website Resource. Compare Sales and Net Income over the last 3 years. (Trend Analysis). Remember to compute trends in
The systems consulting department of Johnson Swimwear designs data collecting, encoding, and reporting systems to fit the needs of other departments within the company. An
Prepare a report for the Forming Department for October showing how much cost should have been assigned to the units completed and transferred to the Stamping Department and t
Describe the relationships between fixed and variable costs employed in flexible budget and the differences between static and flexible budgets?
Compute the material quantity and price variances. Compute the labor rate and efficiency variances. Compute the actual variable overhead rate. Compute the variable overhead sp
Explain the management accountant's role in helping organisations design stronger incentive systems for their employees. Explain the role of benchmarking in evaluating manager
1. What is the amount of annual cash flows that Polaris must earn from these projects to have a 10% internal rate of return? (Hint: Identify the ten-period, 10% factor from th
The Concept of a balance scorecard is the topic. While there is not necessarily one best way to view a balance scorecard, clearly the good indicators of measurement and perf