Hey there I just have two questions with my accounting homework that I do not understand.

This is the first question

P9.7 (Product Mix Decision) Process Solutions provides a computer-based document processing

service. The accountant has produced the following analysis.

Standard Modified Advanced

Sales quantity 1,000 1,100 1,200

Selling price $5 $5 $6

Sales revenue $5,000 $5,500 $7,200

Labour hours 100 120 160

Labour cost @ $20/hour $2,000 $2,400 $3,200

Contribution margin $3,000 $3,100 $4,000

Contribution margin per unit sold $3 $2.82 $3.33

a) The sales manager, whose team is paid a commission on sales revenue, prefers to sell the

higher priced Advanced service. This is also the preferred service for the accountant, although not

for the same reason. The accountant argues that the Advanced service is better because of the

higher contribution margin per unit sold. The operations manager argues that the advanced

service consumes more labour hours than the Standard or Modified services and as labour availability

limits his ability to process work, this should also be taken into account. The operations

manager prefers the Standard or Modified service, as these provide greater ability to use his capacity

more flexibly.

b) The general manager has asked for your advice in relation to this disagreement within the

management team. What advice would you give her?

This is the second question

P9.15 (Cost of Quality and Environmental Costing) The Ceramic Coffee House has been

experiencing declining sales over the last two quarters and has noticed a reduction in the number

of customers. Gupta Sanjay, the store owner, recently negotiated a new supply contract with

Bargain Beans. He has been able to purchase his coffee beans for a 20% discount over his last

supplier.

a) Discuss the implications of using a cheaper coffee bean. Be specific as to how this will impact

costs of quality.

b) What environmental costs might a coffee house need to consider? What are some suggestions

to reduce its overall environmental costs?