ADMS 2510 Study Guide - Opportunity Cost, Contribution Margin, Marginal Cost

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ADMS 2510 Full Course Notes
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ADMS 2510 Full Course Notes
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Note: answers are provided at the end of the paper. Question 1 (25 marks: allow about 45 minutes): You have been hired by george snoopy, president of snoopy ceramics, to provide advice in three areas. First: snoopy ceramics experienced the following gas bills and kiln hours for. Secondly: in its first year of operations, snoopy ceramics produced 1,000,000 units and sold 850,000 units. Cost component information for the first year was as follows. The firm maintains no work in process inventory, and the average unit selling price was . Required: provide george with the following information: (c) prepare the income statement for the year (10 marks) Thirdly: given the cost data george now has, he is considering outsourcing a component of the production operation. Briefly and in point form explain why george might decide not to outsource the component even though to do so would reduce costs (5 marks) Question 2 (25 marks: allow about 45 minutes):

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