Set aside joint roasting cost, a sunk study and allocated overhead, and milling broken almonds into flour adds 130,000 dollars a year: AC505's Unit 4 relevant cost analysis. Searches like "ac 505 unit 4 assignment example", "ac505 unit 4 sample" and "ac505 unit 4 example" land here.
What a finished AC505 Unit 4 relevant cost analysis looks like
A memo to the ingredients division manager, backed by two schedules. The division drafted the first itself: flour carries 1.65 dollars a pound of roasting cost, the 58,000-dollar study commissioned last year and 90,000 of plant overhead, and on that basis selling the pieces as they are earns 18,000 more. The second schedule keeps only amounts that differ between the alternatives. Revenue rises from 1,890,000 dollars to 2,592,000, since 900,000 pounds sold at 2.10 become 810,000 pounds of flour at 3.20 after a 90 percent yield. Added costs are 468,000 of milling at 0.52 a pound, a 68,000 operator and a 36,000 mill lease. The difference, 130,000 a year, favors flour, and an excluded-costs note lists every omitted amount with its reason.
How a AC505 Unit 4 example is structured
The memo leads with the recommendation and one sentence explaining why the division's own schedule reached the opposite answer: it charged flour with 148,000 dollars that would be spent or allocated whichever way the pieces go. The relevant schedule follows, built as incremental columns rather than two full product statements, so each line is visibly a difference. The excluded-costs note comes next and carries real weight: joint roasting cost is incurred before the pieces exist as a separate product, the study was paid last year, and the overhead would be reassigned rather than saved. Sensitivity closes the analysis. Flour stays ahead down to a price of about 3.04 dollars a pound or a yield of about 85.5 percent, and the memo says which of those is more likely to fail. A short paragraph on customers, storage and mill capacity follows the numbers.
The division's schedule, reproduced
Flour charged with 1,485,000 dollars of joint roasting cost, the study and 90,000 of overhead shows 387,000 of profit against 405,000 for pieces sold as they are. The memo reproduces it fairly before explaining where it goes wrong.
Only what differs
Incremental revenue of 702,000 dollars against incremental cost of 572,000: milling at 0.52 a pound on 900,000 pounds, one operator and one lease. The 130,000 difference is the decision's whole financial content.
Three amounts left out, with reasons
Roasting cost is identical under both choices, the 58,000 study was spent last year, and the 90,000 of overhead would land on another department if flour were refused. Each exclusion is written out, since an unexplained gap looks like an error.
Break-even price and yield
At 3.04 dollars a pound, or at a yield near 85.5 percent, the advantage disappears. The memo judges price the weaker assumption, because bakery flour contracts reprice each season while yield has held above 89 percent in trial runs.
What the schedule cannot hold
New bakery customers, flour storage humidity and whether the mill could later take cashew pieces too. None changes the recommendation, but each is named so the manager can weigh it rather than discover it.
Where marks go in AC505 Unit 4
Including an amount that cannot change because of the decision is the error this unit is usually built to catch, and here a single sunk study plus an allocated overhead reverses a 130,000-dollar advantage. Joint costs carried into a sell-or-process-further decision cost heavily, since they are identical under both alternatives. Answers that simply omit the planted amounts without a word earn less than ones listing each exclusion and its reason, because graders cannot tell judgment from oversight. Yield is the quiet trap: pricing flour on 900,000 pounds instead of 810,000 overstates revenue by 288,000 dollars. A number with no recommendation leaves the manager where the question started. Sensitivity earns credit when it names the break-even price or yield, not when it repeats the base case at plus and minus ten percent.
Get a AC505 Unit 4 example written to your instructions
Send every cost the Unit 4 case mentions, including the ones you suspect do not belong, because deciding which to exclude is the graded part; the rubric helps too. Relevant amounts come back in incremental columns, exclusions explained and the break-even point stated, within 24-48h, with no fee on a first sample.
AC505 Unit 4 questions, answered
Why is joint cost irrelevant to processing further?
Because it is incurred before the split-off point and is the same whichever way the product goes afterward. Roasting happens whether the pieces are sold as they are or milled, so its cost cannot differ between the alternatives. Allocating it to either product serves inventory valuation, but carrying it into the decision only adds a figure that cancels or misleads.
Is allocated overhead ever relevant?
Only the part that would actually change. If accepting the flour option adds supervision or utilities, those increases are relevant and belong in the incremental column. Overhead that would simply be reassigned to another department if the option were refused is not, however it is labeled. The analysis should say which portion, if any, is avoidable and show where that figure comes from.
How should the memo present costs it excluded?
In a short note beside the schedule, one line per amount with the reason: sunk, identical under both alternatives, or reassigned rather than saved. That note often earns as much credit as the schedule, because it proves the exclusions were deliberate. Leaving the amounts out silently risks a grader assuming they were missed, which reads as the very error the problem planted.