ACCT208 Lecture 11: ACCT208 Chapter 12
1. Always include VC except when it says NO VSC when inventory is obsolete or flaws
2. Do not include Normal FC as you are within the relevant range and sold within normal channels
3. Include your special costs $2.00
DM $9
DL $8
VOH $7
VSC NO
FOH NO
FSC NO
Special:
Shipping $1.25
Tariffs $5.00 $15,000/3000 unit
Total: $30.25
$8,500 Better Off staying open
Open Close VC
Sales (1000 units x $50) $50,000 $0 DM $9
-VC -$26,000 $0 DL $8
CM $24,000 $0 VOH $7
-FOH -$20,000 -$9,000 VSC $2
-FSC ($72,000/12 mo x 1 mo) -$6,000 -$1,500 $26
NOI -$2,000 -$10,500
Your loss will be $8,500 less if we stay open
$240,000/12 months x 1 month open
4 Make or Outsource
Trace directly VC and FC to making the part.
THIS MEANS ANY COST THAT WILL CONTINUE IS IGNORED
ONLY WRITE DOWN THOSE COSTS YOU WILL SAVE IF YOU OUTSOURCE...SO ALL VC UNLESS IS SAYS NO
then you disregard continuing costs (These are common costs of the company)