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Class Appication 9
Class Appication 9
Class Appication 9
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CM lost if Linens Department is Eliminated
Lines department total CM 600000
10% handware department CM 210000
Less: Fixed Costs that can be Avoided 460000
630000
Incremental Expenses
Variable expenses
DM 84
DL 45
VMOH 4
Special h. 2
Total variable expenses 135 2700
Fixed expenses
Special equipment 250
CM per unit 32 14 21
Further process only B as it has the profit from further processing A and C has a loss