QUIZ 1 – RELEVANT COSTING

- (80,000 – 35,000) – 50,000 = Decrease of 5,000

- Increase in sales value ---

- 8,000 + 12,000 + 35,000 + 7,000 = 62,000

- The avoidable revenues should be compared with the avoidable cost

- Historical Cost

- Depreciation cost of an existing asset

- Kulafu should sell all the products to Tofu after processing further if the selling price per kilo
after further processing is greater than 9.50

- 3 only
 - (58 – 40 – 8) x 50,000 = 500,000

Revenue from special order (50,000 x 58) 2,900,000

Less relevant cost:

Variable Manufacturing (50,000 x 48) 2,400,000

Opportunity cot: loss CM from regular customers

(20,000 units x (100 – 40) 1,200,000 3,600,000

Decrease in operating income if order is accepted 700,000

- Discontinuing ---

- The long-run relationship --

- Potential effect

- All variable cost are relevant

 QUIZ 2 - VARIABLE COSTING

Sales (5,000 x 40) 200,000

DM, VO (5,000 x 8) 40,000

Fixed OH 100,000

Net Income 30,000

V & F S,G & A Expenses 30,000

3,000 x 3 = 27,000
1,000 x 7 = 7,000

- Full Costing

- Charged to the period in which they are incurred

- Higher Income and assets

- D ---

- [(8 + 9+ 3) x 10,000] + 70,000 = 270,000

- D ---
 - C --

[(100,000 + 50,000 – 70,000)/20,000] x 12,000 = 48,000

Sales 200,000

COGS (9 x 5,000) (45,000)

Gross Profit 155,000

Fixed OH
- Year 2 production exceeds year 1 production

- A ---

- B ---