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Nining Case

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Autor:   •  October 25, 2011  •  268 Words (2 Pages)  •  487 Views

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Advanced Management Accounting, R. S. Kaplan, A. A. Atkinson,

International Edition, Third Edition, Prentice Hall International, Inc, 1998

p. 486.

Required

(1) Determine the profit the K&S Construction Company for this sale.

Construction Company to Mr. Baxter.

Price of new house $200,000

Trade-in form old house 50,000

Cash(From mortgage) 150,000

Value received

Cash $150,000

Trade-in 40,000

Total $190,000

Cost of building new house 160,000

Profit $ 30,000

* Cost of repairing roof & basement are $4,000 & $2,000 should be blamed to Columbus Remodeling Company .

(2) What should the charge be for fixing up the house.

At boom season:10000+6000

off-season:16000<charge<13000

(3) Who should be charged with the fixing-up cost?Why? Are there any changes in procedures you would suggest?

Both K&S Construction Company and Columbus Remodeling Company should be charged with the fixing-up cost .Because K&S Construction Company should be responsible for the appraisal of Trade-in form old house,and Columbus Remodeling Company should be responsible for the Cost of repairing roof & basement.

Although close cooperation, they have grown to be independent and inside company compete with outside

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