rcises BE 11-1 Lease or sell Obj. 1 Plymouth Company owns equipment with a cost of $600,000 and accumulated depreciation of $375.000 that can be sold for $300,000, less a 4% sales commission. Alternatively, Plymouth Com- pany can lease the equipment for four years for a total of $320,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Plymouth Company on the equipment would total $40,000 over the four-year lease. Prepare a differential analysis on Argust 7 as to whether Plymouth Company should lease (Alternative 1) or sell (Alternative 2) the equipment BE 11-2 Discontinue a segment Obj. 1 Product Tango has revenue of $1,150,000, variable cost of goods sold of $850,000, variable selling expenses of $275,000, and fixed costs of $125.000, creating an operating loss of $(100,000). Pre pare a differential analysis as of February 13 to determine if Product Tango should be continued (Alternative Dor discontinued (Alternative 2), assuming fixed costs are unaffected by the decision BE 11-3 Make or buy Obj. 1 A company manufactures various-sized plastic bottles for its medicinal product. The manufac- turing cost for small bottles is $55 per unit (100 bottles), including fixed costs of $12 per unit. A proposal is offered to purchase small bottles from an outside source for $36 per unit, plus $3 per unit for freight. Prepare a differential analysis dated January 25 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision. ht2nnn R BE 11-4 Replace equipment Obj. 1 A machine with a book value of $80,000 has an estimated five-year life. A proposal is offered to sell the old machine for $50,500 and replace it with a new machine at a cost of $75,000. The new machine has a five-year life with no residual value. The new machine would reduce annual direct labor costs from $11,200 to $7,400. Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). BE 11-5 Process or sell Obj. 1 Product J19 is produced for $11 per gallon. Product J19 can be sold without additional processing for $18 per gallon, or processed further into Product R33 at an additional cost of $7 per gallon. Product R33 can be sold for $24 per gallon. Prepare a differential analysis dated April 30 on whether to sell Product 19 (Alternative 1) or process further into Product R33 (Alternative 2). Obj. 1 BE 11-6 Accept business at special price Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable production cost is $5.00 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. BE 11-7 Product cost markup percentage Obj. 2 Green Thumb Garden Tools Inc. produces and sells home and garden tools and equipment. A lawnmower has a total cost of $230 per unit, of which $160 is product cost and $70 is selling and administrative expenses. In addition, the total cost of $230 is made up of $120 variable cost and $110 fixed cost. The desired profit is $58 per unit. Determine the markup percentage on product cost. BE 11-8 Bottleneck profit Obj. 3 Product K has a unit contribution margin of $120. Product L has a unit contribution margin of $100. Product K requires five furnace hours, while Product L requires four furnace hours. Determine the most profitable product, assuming the furnace is a bottleneck constraint. W BE 11-3 Make or buy Obj. 1 A company manufactures various-sized plastic bottles for its medicinal product. The manufac- turing cost for small bottles is $55 per unit (100 bottles), including fixed costs of $12 per unit. A proposal is offered to purchase small bottles from an outside source for $36 per unit, plus $3 per unit for freight. Prepare a differential analysis dated January 25 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision