ACCT 202 Chapter 9 Problem 1 Lated below are a number of coets that may be relev

Question

ACCT 202 Chapter 9 Problem 1 Lated below are a number of coets that may be relevant in decisions faced by the management of Lembers Inc, a manufacturer of speedboats Not Relevant Relevant Relevant Relevant Sales Revenue b. Direct Materials Direct Labor dVariable MOHD Depreciation- Model A Book Value Model A isposal Value. Model A Market Value (Cost) Model B i Depreciation. Model EB Machine l Fixed Selling Expense m. General Administrative OHD Place an X in the appropriate column to indicate whetber each item is relevant or not relevant in the following situations: a. Management is considering purchasing a Model B machine to use in addition to the company's present Model A machine. This will incresse the company's production and sales. The increase in volume will be large enough to require increases in fixed selling expenses and in general administrative overhead, but not in the fixed manufacturing overhead Management is instead considering replacing its present Model A machine with a new Model B machine. The Model A machine would be sold. This change will have no effect on production or sales, other than some savings in direcet materials cost due to less waste. b.

Explanation / Answer

Case 1 Case 2 Relavant Not Relavant Relavant Not Relavant a Sales revenue x x b Direct materials x x c Direct labor x x d Variable MOHD x x e Depreciation-Model A x x f Book value-Model A x x g Disposal value-Model A x x h Market value (cost)-Model B x x i Depreciation-Model B machine x x j FMOHD (General) x x k Variable selling expense x x l Fixed selling expense x x m General administrative OHD x x

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