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



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solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1
Total for
250,000 tiles
(1)

Per unit
(2) = (1) ÷ 250,000
Revenues (€3.80
× 250,000) Purchase cost of tiles (€2.88
× 250,000) Ordering costs (€50
× 500) Receiving and storage (€30
× 4,000) Shipping (€40
× 1,500) Total costs Operating income
€950,000 720,000 25,000 120,000 60,000 925,000
€25,000
€3.80 2.88 0.10 0.48 0.24 3.70
€0.10


Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
3
Pagnol-Carrelages’s operating income in 2012, if it makes changes in ordering and material handling, will be as follows
Total for
250,000 tiles
(1)

Per unit
(2) = (1) ÷ 250,000
Revenues (€3.80
× 250,000) Purchase cost of tiles (€2.88
× 250,000) Ordering costs (€25
× 200) Receiving and storage (€28
× 3,125) Shipping (€40
× 1,500) Total costs Operating income
€950,000 720,000 5,000 87,500 60,000 872,500
€77,500
€3.80 2.88 0.02 0.35 0.24 3.49
€0.31 Through better cost management, Pagnol-Carrelages will be able to achieve its target operating income of €0.30 per tile, despite the fact that its revenue per tile has decreased by €0.20 (€4.00 − €3.80) whereas its cost per tile has decreased by only
€0.12 (€3.00 − €2.88).

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