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Two partners who own Progressive Business Solutions, which currently operates out of an office in a small town near Boston, just discovered a vacancy in an office building in downtown Boston. One of the partners favors moving downtown because she believes the additional business gained by moving downtown will exceed the higher rent at the downtown location plus the cost of making the move. The other partner at PBS opposes moving downtown. He argues, "we have already paid for the office stationary, business cards, and a large sign that cannot be moved or sold. We have spent so much on our current office that we cannot afford to waste this money by moving." Evaluate the second partner's advice not to move downtown. Illustrate and fully explain using an example of relevant cost (a cost whose value does affect the optimal decision) and an example of irrelevant cost (a cost whose value does not affect the optimal decision) to the business regarding this decision.
Recognize the decision variables, exogenous variables, performance measure and intermediate variables. Illustrate the relationships between variables identified in part 1. Compute the break-even point
During the period, actual sales totaled 58,000 units. Prepare a variance report to show the difference between the master budget and the flexible budget.
Compute the number of gizmos needed to break even under present price and cost conditions. Compute how many units would have to be sold to meet the profit target for each of suggested options
What relevant costs might you consider in deciding whether to accept the order at reduced selling price? What costs would you not consider when making your decision? Why are these costs not relevant?
What are the corresponding units for direct materials and conversion costs, correspondingly, for June?
A review of Parrish Corporation's accounting records found that at a volume of 144,000 units, the variable and fixed cost per unit amounted to $6 and $2, respectively.
Applying Activity Based Costing
Make a distinction between a product item, a product mix, and a product line. Give examples.
You're in the job interview and your possible employer asks you to explain the differences between the flexible and static budget and to explain which you would recommend for the small business and why. How would you respond to this potential empl..
Nashville Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage and long-run monthly usage of the staff hours for Operating Departments 1 and 2 follow.
Describe how a job analysis increases productivity, aids in job description creation, and guides employee team formation.
Compare and contrast a static budget and the flexible budget in terms of both characteristics, timing and uses.
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