1. The _________________ budget should always be prepared first. 2. Why should managers not be punished for missing a budget target? 3. Why can

It was determined that the special equipment has no resale value and cannot be used for another process.  The factory overhead is an allocation and would be unaffected by the decision.  The costs above are based on the same 20,000 units that the supplier would supply.

Should Austin continue to manufacture the component or purchase it from the outside supplier? (support your work with numbers).

3.

Sherri is going to Chicago to see her friend Ryan.  She is trying to decide which is cheaper, driving or riding the train.  Following is a list of costs that Sherri has compiled in relation to the trip. 

Identify which costs are relevant (R).

________ Annual straight line depreciation on the car

_______ Cost of gasoline

________ Annual cost of auto insurance and license fee

________ Maintenance and repairs

_________ Parking fees at home

_______ Cost of train ticket

________ Reduction in resale value of car due to mileage used and wear and tear

_________ Cost of putting dog in kennel while she is gone

________ Cost of parking car in Chicago