please see attachment and post your response with an explanation of the approach you took and your analysis. In what other ways could this problem have been approached?

2 paragraphs

INTRODUCTION TO MANAGEMENT ACCOUNTING 16E KRISTINA CACAJ 5-55 Pricing at the Grand Canyon Railway (Horngren, Sundem, Schatzberg, & Burgstahler, 2012, p. 217-218) 1 Price Offered Extra cost per passenger Total Passengers Total Revenue Option A Option B 2 Which of the two options is more profitable to Grand Canyon? Comment on which costs are irrelevant to this decision. Option A Option B $32 $32 $15 $15 30 $510.00 $480.00 Additional Costs Margin For Option $530 $20 $253 $227 Considering the above calculations I would suggest option B as it yields more revenue than option A compared to option B. Option A yields a extra Profit Margin of $20, while Option B Yiels an extra profit of $227 The costs that do not vary for both the options remain irrelevant to decision-making process such as the tour guide cost, cost of moving the car and engine to the main truck, and depreciation cost, Should Grand Canyon accept the proposal for the option you found best in number 1? Comment on what costs are relevant for this decision but not for the decision in number 1. The decision whetther to accept the proposal for option B depends on the total additional revenues earned and costs incurred for option B, and the Best results from the two options. The option is profitable and can earn an extra profit margin of $227 for the company as displayed above. The cost of the tour guide and the cost of moving the cars is impotrant for the decision making process because they are dependent on the decision whether the tour agent services are used or not. The depreciatikon is a fixed cost, hence irrelevent as long as the cars are available. INTRODUCTION TO MANAGEMENT ACCOUNTING 16E & Burgstahler, 2012, p. 217-218) Canyon? Comment on which costs option B as it yields more on A yields a extra Profit Margin The costs that do not vary for ing process such as the tour main truck, and depreciation on you found best in number 1? but not for the decision in number ption B depends on the total option B, and the Best results can earn an extra profit margin ost of the tour guide and the cost king process because they are ervices are used or not. The ng as the cars are available. INTRODUCTION TO MANAGEMENT ACCOUNTING 16E KRISTINA CACAJ 5-59 Target Costing (Horngren, Sundem, Schatzberg, & Burgstahler, 2012, p. 219) Memphis desires a gross margin of 20% of the manufacturing cost. 1 Suppose Memphis used cost-plus pricing, setting the price 20% above the manufacturing cost. What price would be charged for the motor? Would you produce such a motor if you were a manager at Memphis? Explain. Cost plus pricing: manufacturing cost $ add 20% $ Price of charged for Motor $ 27.00 5.40 32.40 If I were the manager I would not suggest producing the motor because the market research clearly states that are willing to pay $26 as an appropriate selling price. 2 Suppose Memphis uses target costing. What price would the company charge for a garage-door-opener motor? What is the highest acceptable manufacturing cost for which Memphis would be willing to produce the motor? Target costing: sales price margin Price for Garage Door Opener $ $ 26.00