Accounting test 2
Assume your goal in life is to retire with three million dollars. How much would you need to save at the end of each year if interest rates average 5% and you have a 10-year work life? Question 1 options: $238,512 $15,000 $1,841,740 $600,000
A
Division A sells ground veal internally to Division B, which in turn, produces veal burgers that sell for $12 per pound. Division A incurs costs of $5.25 per pound while Division B incurs additional costs of $11.50 per pound. What is Division A's operating income per burger, assuming the transfer price of the ground veal is set at $7.00 per burger? Question 6 options: $1.75 $4.50 $8.75 $2.25
A
Hypore Darby Park Department is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $348,400. The annual cost savings if the new machine is acquired will be $80,000. The machine will have a 6-year life, at which time the terminal disposal value is expected to be zero. Hypore Park Department is assuming no tax consequences. What is the internal rate of return for Hypore Park Department? Question 5 options: 10% 5% 9% 11%
A
Investment A requires a net investment of $604,021 The required rate of return is 12% for the three-year annuity. What are the annual cash inflows if the net present value equals 0? (rounded) Question 7 options: $251,466 $604,016 $2,416,084 -$1,812,063
A
Morrow Corp manufactures glasses. The manufacturing cycle efficiency is 70%. What is its waiting time if the manufacturing lead time is 120 minutes per keyboard? Question 8 options: 36.00 minutes 42.00 minutes 48.00 minutes 38.00 minutes
A
The Morrow Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Morrow Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Month Cost Hours January $40,000 3,730 February $37,600 3,200 March $42,800 3,480 April $50,200 5,000 May $68,400 6,000 June $61,200 4,250 What is the estimated total cost at an operating level of 3,400 hours? Question 2 options: $39,800 $37,400 $37,725 $70,750
A
Which of the following is an opportunity cost? Question 1 options: lost sales cost of production cost of sales marginal cost
A
Product testing is an example of ________. Question 7 options: external failure costs appraisal costs prevention costs internal failure costs
B
Clayton Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Clayton Manufacturing has a policy of adding a 20% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $50 Direct labor 30 Manufacturing overhead 10 Marketing costs 20 Fixed costs: Manufacturing overhead 110 Marketing costs 30 Total costs 250 Markup (20% of total costs) 50 Estimated selling price $300 If the European customer wanted a long-term commitment, and not a one-time-only special order, for supplying this product, calculate the most likely price to be quoted assuming the markup remains the same? Question 3 options: $110 $300 $250 $190
B
Difend Cleaners has been considering the purchase of an industrial dry-cleaning machine. The existing machine is operable for three more years and will have a zero disposal price. If the machine is disposed now, it may be sold for $100,000. The new machine will cost $430,000 and an additional cash investment in working capital of $100,000 will be required. The new machine will reduce the average amount of time required to wash clothing and will decrease labor costs. The investment is expected to net $140,000 in additional cash inflows during the first year of acquisition and $270,000 each additional year of use. The new machine has a three-year life, and zero disposal value. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life. What is the net present value of the investment, assuming the required rate of return is 9%? Would the company want to purchase the new machine? Question 2 options: $208,440; no $134,160; yes $(208,440); yes $(134,160); no
B
The Charmatz Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year: Budgeted costs of operating the copying facility for 400,000 to 600,000 copies: Fixed costs per year $64,000 Variable costs 5 cents (0.05) per copy Budgeted long-run usage in copies per year: Marketing Department 90,000 copies Operations Department 310,000 copies Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Marketing Department was 120,000 copies and by the Operations Department was 380,000 copies. If a dual-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Operations Department? Question 5 options: $64,140 $65,100 $68,600 $67,640
B
The costs of quality are the costs incurred ________. Question 10 options: to enhance large scale production to prevent the production of a low quality product because of warranties, normal spoilage, abnormal spoilage, and scrap due to defective and low quality product
B
Three major influences on pricing decisions are ________. Question 9 options: variable costs, fixed costs, and mixed costs competition, costs, and customers competition, demand, and production efficiency continuous improvement, customer satisfaction, and supply
B
Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is high-end watches. Each division's costs are provided below: Manufacturing: Variable costs per unit $1.87 Fixed costs per unit $7.29 Distribution: Variable costs per unit $1.40 Fixed costs per unit $0.60 The Distribution Division has been operating at a capacity of 4,009,000 units a week and usually purchases 2,004,500 units from the Manufacturing Division and 2,004,500 units from other suppliers at $10.00 per unit. What is the transfer price per watch from the Manufacturing Division to the Distribution Division, assuming the method used to place a value on each watch is 170% of variable costs? Question 1 options: $3.19 $3.18 $8.13 $1.87
B
Which of the following is the first stage to the capital budgeting process? Question 6 options: determine which investment yields the greatest benefit and the least cost to the organization identify potential capital investments that agree with the organization's strategy forecast all potential cash flows attributable to the alternative projects obtain funding and make the investments selected
B
Locil Corporation recently purchased a new machine for $307,890 with a eight-year life. The old equipment has a remaining life of eight years and no disposal value at the time of replacement. Net cash flows will be $90,000 per year. What is the internal rate of return? Question 3 options: 37% 29% 24% 33%
C
Which of the following best describes a transfer price? Question 2 options: It is the price that is charged by a department of an organization when it sells its goods to its competitors It is the price charged by an organization when it transfer goods to another organization in lieu of services provided by it It is the price one subunit charges for a product or service supplied to another subunit of the same organization It is the price that is to be used while calculating revenue from sales to customers for tax purposes.
C
Cool Air Inc., manufactures single room sized air conditioners. The cost accounting system estimates manufacturing costs to be $250 per air conditioner, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Cool Air Inc.'s policy to add a 30% markup to full costs. A medium sized motel chain is currently expanding and has decided to create more rooms and air condition all of its rooms, which are currently not air conditioned. Cool Air Inc. is invited to submit a bid to the motel chain. What per unit price will Cool Air Inc. most likely bid for this special order of 200 units? Assume that the price is being fixed for a long-term commitment Question 2 options: $300.00 per unit $250.00 per unit $200.00 per unit $325.00 per unit
D
Georgia Corp manufactures expensive tables. Its varnishing department is fully automated and requires substantial inspection to keep the machines operating properly. An improperly varnished table is very expensive to correct. Inspection hours for the 5800 tables varnished in September totaled 2000 hours by 12 employees. Eight quarts of varnish were used, on average, for each table. The standard amount of varnish per table is nine quarts. The cost of inspection for September was equal to the budgeted amount of $40,300. What is the inspection cost per unit? (Round the final answer to the nearest cent.) Question 2 options: $7.95 $26.19 $18.99 $6.95
D
High Tech Manufacturing Inc., incurred total indirect manufacturing labor costs of $480,000. The company is labor intensive. Total labor hours during the period were 4,400. Using qualitative analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver-labor-hours. They separated the total indirect manufacturing labor costs into costs that are fixed ($130,000 based on 8,100 hours of labor) and costs that are variable based on the number of labor-hours used. The company has estimated 7,700 labor hours during the next period. What will be the total cost for the estimated 7,700 hours? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.) Question 1 options: $462,716 $840,000 $586,296 $742,535
D
Plish Company manufactures only one type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $60.00. (Ignore changes in inventory.) The fixed costs for the Compressor Division are assumed to be the same over the range of 13,000-18,000 units. The fixed costs for the Fabrication Division are assumed to be $11.00 per unit at 18,000 units. Compressor's costs per compressor are: Direct materials $17 Direct labor $14.50 Variable overhead $3.50 Division fixed costs $11.50 Fabrication's costs per completed air conditioner are: Direct materials $154.00 Direct labor $67.50 Variable overhead $26.00 Division fixed costs $11.50 If the Fabrication Division sells 1000 air conditioners at a price of $475.00 per washing machine to customers, what is the operating income of both divisions together? Question 7 options: $151,000 $167,500 $147,000 $169,500
D
A company's invested capital is $13,000,000 and management has determined that the target rate of return on investment is 10%. Last year, the company produced 131,313 units and this year expects to units sales to be 10% above last year. The cost of the product is estimated to be $13 per unit. What is the target operating income per unit? (Round any intermediary calculations to the nearest unit and your final answer to the nearest cent.) Question 4 options: $9.00 $9.90 $6.50 $13.00
a
A recent college graduate from Clayton State University has the choice of buying a new car for $33,500 or investing the money for four years with an 11% expected annual rate of return. He has an investment of $41,000 in equities and bonds which yields 8% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is ________. Question 6 options: $14,740 $41,000 $3,280 $18,040
a
After conducting a market research study, Clayton Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $240. The annual target sales volume for interior doors is 21,000. Clayton has target operating income of 20% of sales. What is the target cost? Question 8 options: $4,032,000 $1,008,000 $5,040,000 $6,048,000
a
Ambinu Flower Company provides flowers and other nursery products for decorative purposes in medium to large sized restaurants and businesses. The company has been investigating the purchase of a new specially equipped van for deliveries. The van has a value of $133,750 with a six-year life. The expected additional cash inflows are $52,500 per year. What is the payback period for this investment? Question 4 options: 2.5 years 1.5 years 3.5 years 6 years
a
Clayton Company uses the high-low method to estimate the cost function. The information for 2020 is provided below: Machine-hours Labor Costs Highest observation of cost driver 600 $36,000 Lowest observation of cost driver 400 $26,000 What is the estimated cost function for the above data? Question 7 options: y = 36,000 + 60.00X y = 26,000 + 62.00X y = 6,000 + 50.00X y = 30,000 + 65.00X
c
Georgia Corporation has a plant capacity of 200,000 units per month. Unit costs at capacity are: Direct materials $6.00 Direct labor 5.00 Variable overhead 4.00 Fixed overhead 2.00 Marketing—fixed 6.00 Marketing/distribution—variable 4.60 Current monthly sales are 190,000 units at $30.00 each. Q, Inc., has contacted Georgia Corporation about purchasing 2,500 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is Georgia's change in operating profits if the one-time-only special order is accepted? Question 4 options: $49,000 increase $31,500 increase $22,500 increase $11,000 increase
d
Kitchens Sales Inc. is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers: Direct materials $554 Direct labor 364 Variable manufacturing support 56 Fixed manufacturing support 120 Total manufacturing costs 1,094 Markup (50%) 547 Targeted selling price $1,641 Kitchens Sales inc. has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $66 per unit. The average marketing cost of Kitchens Sales product is $173 per order. Other than price, what other items should Kitchens Sales consider before accepting this one-time-only special order? Question 2 options: demand for cherry cabinets price is the only consideration reaction of shareholders reaction of existing customers to the lower price offered to Mr. Louis Cifer
d
Georgia Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year: Budgeted costs of operating the plant for 2000 to 3000 hours: Fixed operating costs per year $500,000 Variable operating costs $850 per hour Budgeted long-run usage per year: Flashlight Division 2000 hours Night Light Division 1000 hours Practical capacity 4000 hours Assume that practical capacity is used to calculate the allocation rates. Actual usage for the year by the Flashlight Division was 1500 hours and by the Night Light Division was 800 hours. If a dual-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Night Light Division? Question 6 options: $950,000 $930,000 $975,000 $780,000
C
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $400,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $200,000 are allocated based on the number of employees. The costs of operating departments A and B are $240,000 and $360,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Production Support Departments Departments Maintenance Department Personnel Department A B Budgeted costs $400,000 $200,000 $240,000 $360,000 Budgeted maintenance-hours NA 820 1240 640 Number of employees 100 NA 250 600 Using the direct method, what amount of Personnel Department costs will be allocated to Department A? (Do not round any intermediary calculations.) Question 7 options: $70,588 $52,632 $58,824 $141,176
C
Plish Company manufactures only one type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $42.00. (Ignore changes in inventory.) The fixed costs for the Compressor Division are assumed to be the same over the range of 12,000-17,000 units. The fixed costs for the Fabrication Division are assumed to be $8.00 per unit at 17,000 units. Compressor's costs per compressor are: Direct materials $20 Direct labor $24.00 Variable overhead $4.50 Division fixed costs $10.50 Fabrication's costs per completed air conditioner are: Direct materials $170.00 Direct labor $66.00 Variable overhead $23.00 Division fixed costs $10.50 Assume the transfer price for a compressor is 145% of total costs of the Compressor Division and 1500 of the compressors are produced and transferred to the Fabrication Division. The Compressor Division's operating income is ________. Question 3 options: $128,325 $42,188 $39,825 $29,400
C
Plish Company manufactures only one type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $60.00. (Ignore changes in inventory.) The fixed costs for the Compressor Division are assumed to be the same over the range of 8000-13,000 units. The fixed costs for the Fabrication Division are assumed to be $11.50 per unit at 13,000 units. Compressor's costs per compressor are: Direct materials $18 Direct labor $17.00 Variable overhead $6.50 Division fixed costs $8.00 Fabrication's costs per completed air conditioner are: Direct materials $162.00 Direct labor $66.00 Variable overhead $23.00 Division fixed costs $8.00 What is the transfer price per compressor from the Compressor Division to the Fabrication Division if the transfer price per compressor is 110% of full costs? Question 4 options: $32.45 $47.30 $54.45 $19.80
C
Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is high-end watches. Each division's costs are provided below: Manufacturing: Variable costs per unit $2.45 Fixed costs per unit $9.04 Distribution: Variable costs per unit $0.60 Fixed costs per unit $1.20 The Distribution Division has been operating at a capacity of 4,010,000 units a week and usually purchases 2,005,000 units from the Manufacturing Division and 2,005,000 units from other suppliers at $15.00 per unit. What is the transfer price per watch from the Manufacturing Division to the Distribution Division, assuming the method used to place a value on each transfer is 125% of full costs? Question 5 options: $15.00 $19.25 $14.36 $11.49
C
Which of the following best describes conformance quality? Question 6 options: it is the first step of a quality management system such as ISO 9000 it focuses on how a product meets customer needs and wants it is the performance of a product or service according to design and product specifications it is making the product according to design, engineering, and manufacturing specifications
C
Which of the following is a financial measure of quality? Question 4 options: number of defective units shipped to customers as a percentage of total units shipped interest costs operating income growth percentage of highly satisfied customers
C
Which of the following is true of goal congruence? Question 8 options: It exists when both internal and external stakeholders of an organization have similar goals. It exists when the management's strategy is in line with the shareholders' requirements. It exists when individuals and groups work toward achieving the organization's goals. It exists when an organization's goals are in line with the social acceptability of organizational goals
C
Atlanta Products has a budget of $900,000 in 2021 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $80,000 in variable costs. The new method will require $40,000 in training costs and $100,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. What is the net change in the budget for prevention costs if the procedures are automated in 2021? Will management agree with the changes? Question 9 options: $80,000 decrease, yes $60,000 decrease, yes $140,000 increase, no $60,000 increase, yes
D
Atlanta Products has a budget of $900,000 in 2021 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $80,000 in variable costs. The new method will require $40,000 in training costs and $100,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 1/3 with the new procedures? Question 3 options: $750,000 decrease $67,500 decrease $500,000 decrease $22,500 decrease
D
The Georgia Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year: Budgeted costs of operating the copying facility for 300,000 to 500,000 copies: Fixed costs per year $69,000 Variable costs 3 cents (0.03) per copy Budgeted long-run usage in copies per year: Marketing Department 100,000 copies Operations Department 360,000 copies Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Marketing Department was 70,000 copies and by the Operations Department was 330,000 copies. If a single-rate cost-allocation method is used, what amount of copying facility costs will be allocated to the Marketing Department? Assume actual usage is used to allocate copying costs. (Do not round interim calculations and round the final calculation to the nearest dollar.) Question 8 options: $20,250 $2100 $18,000 $12,600
D
Which of the following is considered a cost of quality? Question 5 options: sunk costs contingent liabilities opportunity costs external failure costs
D
Atlanta Generator Supply is approached by Mr. Stephen, a new customer from Clayton State University, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Atlanta Generator Supply has excess capacity. The following per unit data apply for sales to regular customers: Direct materials $190 Direct manufacturing labor 180 Variable manufacturing support 280 Fixed manufacturing support 140 Total manufacturing costs 790 Markup (10% of total manufacturing costs) 79 Estimated selling price $869 If Mr. Stephen wanted a long-term commitment, and not a one-time-only special order, for supplying this product, calculate the most likely price to be quoted assuming the markup remains the same? Question 10 options: $869 $650 $790 $370
a
Atlanta Manufacturers Inc. is approached by a potential new customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $170 Direct labor 90 Manufacturing support 135 Marketing costs 85 Fixed costs: Manufacturing support 145 Marketing costs 75 Total costs 700 Markup (40%) 280 Targeted selling price $980 What is the contribution margin per unit? Question 1 options: $500 $700 $280 $220
a
Morrow Generator Supply is approached by Mr. Stephen, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Morrow Generator Supply has excess capacity. The following per unit data apply for sales to regular customers: Direct materials $1800.00 Direct manufacturing labor 130.00 Variable manufacturing support 210.00 Fixed manufacturing support 150.00 Total manufacturing costs 2290.00 Markup (20% of total manufacturing costs) 458.00 Estimated selling price $2748.00 For Morrow Generator Supply, what is the minimum acceptable price of this one-time-only special order? Question 1 options: $2140.00 $2290.00 $1930.00 $2748.00
a
Sales of Granite City Products Inc. have been on a steady decline for the last 12 months. A market research study conducted revealed that the product of Granite City Products Inc. can be sold only for $500 as opposed to the current market price charged of $600 per unit. Granite City Products Inc. has decided to revise its sales price to $500. The annual sales target volume of the product after price revision is 200 units. Granite City Products Inc. wants to earn 40% on its sales amount. What is the total target cost? Question 5 options: $60,000 $40,000 $100,000 $140,000
a
W.T. Ginsburg Engine Company manufactures part ACT30107 used in several of its engine models. Monthly production costs for 1,090 units are as follows: Direct materials $46,000 Direct labor 10,500 Variable overhead costs 32,500 Fixed overhead costs 22,000 Total costs $111,000 It is estimated that 6% of the fixed overhead costs assigned to ACT30107 will no longer be incurred if the company purchases ACT30107 from the outside supplier. W.T Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $94.75 per unit. If the company accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total ________. Question 10 options: $90,320 $111,000 $112,320 $89,000
a
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $200,000 are allocated based on the number of employees. The costs of operating departments A and B are $208,000 and $312,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Production Support Departments Departments Maintenance Department Personnel Department A B Budgeted costs $320,000 $200,000 $208,000 $312,000 Budgeted maintenance-hours NA 860 1230 690 Number of employees 50 NA 270 630 Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first? (Do not round any intermediary calculations.) Question 2 options: $88,489 $79,424 $31,079 $49,640
b
In a perfectly competitive market, which of the following is a primary factor influencing pricing decisions? Question 6 options: availability of raw materials in the market value customers place on product cost of production information on competitor's cost structure
b
Kitchens Sales Inc. is approached by Mr. Louis Cifer, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers: Direct materials $556 Direct labor 362 Variable manufacturing support 60 Fixed manufacturing support 126 Total manufacturing costs 1,104 Markup (50%) 552 Targeted selling price $1,656 Kitchens Sales Inc. has excess capacity. Mr. Cifer wants the cabinets in cherry rather than oak, so direct material costs will increase by $70 per unit. The average marketing cost of Kitchens Sales product is $173 per order. For Kitchens, what is the full cost of the one-time-only special order? Question 3 options: $1,347 $1,174 $1,104 $1,034
b
Morrow Company uses the high-low method to estimate the cost function. The information for 2020 is provided below: Machine-hours Labor Costs Highest observation of cost driver 900 $36,000 Lowest observation of cost driver 100 $14,000 What is the estimated total cost when 450 machine-hours are used? Question 8 options: $63,000 $23,625 $32,000 $18,000
b
Morrow Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $130 Direct labor 60 Manufacturing support 105 Marketing costs 95 Fixed costs: Manufacturing support 175 Marketing costs 65 Total costs 630 Markup (50%) 315 Targeted selling price $945 What is the change in operating profits if the one-time-only special order for 1,030 units is accepted for $550 a unit by Morrow? Question 5 options: $164,170 decrease in operating profits $ 164,800 increase in operating profits $164,800 decrease in operating profits $164,170 increase in operating profits
b
Presented below are the production data for the first six months of the year for the mixed costs incurred by Clayton Company. Month Cost Units January $5,260 4,100 February $5,000 4,000 March $6,810 5,520 April $9,900 9,000 May $5,900 4,960 June $7,390 6,510 Clayton Company uses the high-low method to analyze mixed costs. How would the cost function be stated? Question 6 options: y = $2,510 + $0.98X y = $1,080 + $0.98X y = $9,900 + $1.10X y = $4,900 + $1.25X
b
Sales of Granite City Products Inc. have been on a steady decline for the last 12 months. A market research study conducted revealed that the product of Granite City Products Inc. can be sold only for $440 as opposed to the current market price charged of $540 per unit. Granite City Products Inc. has decided to revise its sales price to $440. The annual sales target volume of the product after price revision is 260 units. Granite City Products Inc. wants to earn 30% on its sales amount. What are the target sales revenues? Question 7 options: $80,080 $114,400 $42,120 $148,720
b
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $310,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $102,500 and $123,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Production Support Departments Departments Warehouse Department Data Center Department Music Books Budgeted costs $310,000 $100,000 $102,500 $123,000 Budgeted warehouse-hours NA 520 1080 1590 Number of computer hours 270 NA 900 1020 Using the step-down method, what amount of Warehouse Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Do not round any intermediary calculations.) Question 3 options: $33,856 $34,702 $104,953 $125,393
c
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Production Support Departments Departments Warehouse Department Data Center Department Music Books Budgeted costs $350,000 $100,000 $112,500 $135,000 Budgeted warehouse-hours NA 560 1100 1580 Number of computer hours 270 NA 870 1070 Using the direct method, what amount of Warehouse Department costs will be allocated to Department Books? (Do not round any intermediary calculations.) Question 1 options: $135,000 $143,657 $206,343 $170,679
c
M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2020 operations. Sales (1,500 televisions) $1,500,000 Cost of goods sold 555,000 Store manager's salary per year 120,000 Operating costs per year 210,000 Advertising and promotion per year 18,000 Commissions (2.8% of sales) 42,000 What were total fixed costs for 2020? Question 3 options: $945,000 $330,000 $597,000 $348,000
c
Place the following steps from the five-step decision process in order: A = Obtain information including historical costs B = Evaluate performance to provide feedback C = Make decisions choosing among alternatives D = Make predictions about the future E = Identify the problem and uncertainties Question 7 options: D, C, B, A, E E, A, D, B, C E, A, D, C, B A, E, D, B, C
c
The cost components of a heater include $35 for the compressor, $11 for the sheet molded compound frame, and $74 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,300 heaters in the coming year. What cost function best represents these costs? Question 4 options: y = 55,000 + 1,300X y = 1,300 + 120X y = 55,000 + 120X y = 1,300 + 55,000X
c
The method that allocates costs in each cost pool using the same rate per unit is known as the ________. Question 4 options: incremental cost-allocation method dual-rate cost-allocation method single-rate cost allocation method reciprocal cost-allocation method
c
Morrow City Inc. manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year. With a 75-cent price increase, demand is expected to fall by 7,000 units. Current Projected Demand 79,000 units 72,000 units Selling price $8.50 $9.25 Incremental cost per unit $5.80 $5.80 If the price increase is implemented, operating profit is projected to ________. Question 9 options: decrease by $7,000 decrease by $5,250 increase by $5,250 increase by $35,100
d
Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $51.00 Direct labor 43.00 Variable overhead 38.00 Fixed overhead 33.00 Total $165.00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $138.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium? Question 8 options: $1,739,000 $1,029,000 $929,000 $1,409,000
d
The Atlanta Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Atlanta Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Cost Hours $24,000 5,000 $26,100 6,300 $34,700 7,900 $48,000 11,000 $38,300 9,250 What is the cost function? Question 5 options: y = $48,000 + $4.80X y = $34,700 + $4.80X y = $24,000 + $4.36X y = $4,000 + $4.00X
d
