Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Download 1.72 Mb.

View original pdf

Page	162/469
Date	01.12.2021
Size	1.72 Mb.
	#57828

1 ... 158 159 160 161 162 163 164 165 ... 469

solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1

7.21 Operating profit effects of alternative denominator-level concepts. (30 min) 1

Barrels
per hour
Working
hours
per day
Working
days
per year

Capacity
Theoretical capacity Practical capacity
600 500 24 20 365 350
= 5,256,000
= 3,500,000
3
The smaller the denominator, the higher the amount of overhead costs capitalised for stock units. Thus, if the plant manager wishes to be able to adjust plant operating profit by building up stock, master-budget utilisation or possibly normal utilisation would be preferred.

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
7.21
Operating profit effects of alternative denominator-level concepts.
(30 min)
1
Solution Exhibit 7.17 reports the operating profit for each denominator-level concept. Calculations include

Download 1.72 Mb.

Share with your friends:

1 ... 158 159 160 161 162 163 164 165 ... 469