For 6,000 special-order skillets the answer is yes in the first quarter and no in the fourth, and this AC420 Unit 9 relevant cost decision memo shows why. Searches like "ac 420 unit 9 assignment example", "ac420 unit 9 sample" and "ac420 unit 9 example" land here.
What a finished AC420 Unit 9 relevant cost decision memo looks like
A one-page memo to the sales director with two supporting exhibits. The memo's opening paragraph gives the recommendation and its condition. Exhibit A sorts every cost the problem lists: iron, labor and variable overhead of 5.84 dollars a skillet, the 0.35 private-label box and a one-time 1,800-dollar packaging die are relevant; fixed overhead of 4.06 absorbed per unit, depreciation on the molding line and the existing skillet pattern are not; the 6 percent commission is excluded because this retailer buys direct. Exhibit B sets revenue of 60,600 against incremental cost of 38,940 for a gain of 21,660, and beside it the full-cost view, which shows a loss of about 2,700. A second column reruns the order in the fourth quarter, when each displaced regular sale gives up 9.67 of contribution.
How a AC420 Unit 9 example is structured
The recommendation leads, since a sales director reads the first paragraph and decides whether to continue. Exhibit A comes before any arithmetic and applies one test to each line, whether the amount would differ if the order were accepted, so a reader who disputes the answer can find the exact classification at issue. Fixed overhead gets a sentence of its own because it is the line that makes the order look unprofitable; plant supervision and building costs will be paid whether the retailer's skillets run or not. The full-cost column is kept on purpose, as the view the sales director has already seen. The capacity column is where the memo earns its condition: in the fourth quarter every retailer skillet replaces a regular one, the opportunity cost of 58,020 dollars turns the gain into a 36,360 loss, and the minimum acceptable price rises from 6.49 to 16.16.
Yes, with a calendar condition
Accept for delivery from first-quarter production only. Added profit and the one circumstance that would reverse it both appear in the memo's first paragraph.
Costs that differ
Variable manufacturing cost of 5.84 a skillet, the 0.35 private-label box and an 1,800-dollar die, all incurred only if the order is taken.
Costs that stay
Absorbed fixed overhead, line depreciation and a pattern bought years ago. The commission drops out too, because no sales representative handles a direct retail account.
Why the full-cost view misleads
At 9.90 a skillet the order shows a loss of about 2,700 dollars, a result produced entirely by fixed costs the plant pays either way.
November changes the answer
At full capacity each order skillet displaces one earning 9.67 of contribution, and the price needed to break even climbs to 16.16.
What the numbers leave out
Channel conflict if the retailer undercuts existing dealers, and whether a first-quarter order at this price sets expectations for the next one.
Where marks go in AC420 Unit 9
Counting absorbed fixed overhead as part of the order's cost is the classic loss here, and graders meet it in its most common disguise: the offered price compared with the 9.90 full cost from the product cost sheet. The memo then rejects a profitable order for the wrong reason. Charging the order a sales commission that would never be paid is a quieter version of the same error. Sunk items, the existing pattern and molding-line depreciation, listed as relevant draw deductions each time they appear. The heaviest judgment loss comes from ignoring capacity: a memo that accepts the order without asking when it would run has answered only half the problem. Qualitative factors listed without a decision, and recommendations that omit the minimum acceptable price, forfeit smaller amounts.
Get a AC420 Unit 9 example written to your instructions
Special-order problems turn on details, so pass along the Unit 9 scenario with its offered price, the cost sheet, any capacity statement and the rubric. Each cost line gets a relevant or irrelevant verdict and a reason, the order is priced under the capacity conditions the facts allow, and the memo reaches a decision. 24-48h; first custom sample free.
AC420 Unit 9 questions, answered
What is the minimum price the plant should accept?
With idle capacity, the incremental cost per unit: here 38,940 dollars over 6,000 skillets, or 6.49 each, including the die spread across the order. At full capacity, that figure plus the contribution given up on each displaced regular sale, which lifts the floor to 16.16. The sample states both, because the answer depends on the quarter.
Is the existing skillet pattern ever relevant?
Not its original cost, which was spent whether or not this order is accepted. What could be relevant is wear: if the order would shorten the pattern's life and bring forward a replacement, the cost of that earlier replacement belongs in the analysis. The sample notes the possibility and treats it as immaterial for 6,000 pours.
How much space should qualitative factors get?
Enough to change the recommendation if they should. With a gain of 21,660 dollars in the first quarter, channel conflict would have to be serious to reverse it, so the sample gives the factors a short paragraph and a condition, deliveries packed under the retailer's brand only. A decision memo that ends on a balanced list without deciding tends to lose marks.