BUSA HW 7

Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $20,000 for 20,000 pounds of the product. The costs per pound to make this product include: Cost per Pound Direct Labor $0.30 Direct Materials $0.60 Allocated Unavoidable Overhead $0.20 If Daily Kneads outsources, what is the savings (or loss) per pound for the company as a whole?

-.1

Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $20,000 for 20,000 pounds of the product. The costs per pound to make this product include: Cost per Pound Direct Labor $0.30 Direct Materials $0.60 Allocated Unavoidable Overhead $0.30 If Daily Kneads outsources, what is the savings (or loss) per pound for the company as a whole?

-.1 (screenshot 4)

Applesoft produces tablets, laptops and televisions. Applesoft typically sells 1,000 tablets a year. The tablet information is as follows: Selling price per unit $60 Direct material cost per unit $30 Direct labor cost per unit $15 Total allocated overhead (1/4 avoidable if eliminate tablets) $20,000 One fourth of the allocated overhead would be avoidable if the tablets were eliminated. How much would Net Income change by if Applesoft were to eliminate the tablets?

-10,000 (Screenshot 8)

Quiche & Tell, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $15,000 for 3,000 quiches. The costs per quiche to make include: Cost per Quiche Allocated Corporate Overhead $1 Direct Labor $2 Direct Materials $1 Manager's Salary $8 If Quiche & Tell outsources, what is the savings (or loss) per quiche?

-2

Quiche & Tell, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $15,000 for 3,000 quiches. The costs per quiche to make include: Cost per Quiche Allocated Corporate Overhead $1 Direct Labor $2 Direct Materials $1 Manager's Salary $7 If Quiche & Tell outsources, what is the savings (or loss) per quiche?

-2 (Module 7, LO 7.2 The relevant costs are those that will change as a result of the decision. In this example, the variable direct labor and materials will be eliminated if the company outsources and thus are relevant. The allocated costs will not change and thus are irrelevant. If the cost to outsource is less than the direct materials and labor then the company should outsource.)

Applesoft produces tablets, laptops and televisions. Applesoft typically sells 1,000 tablets a year. The tablet information is as follows: Selling price per unit $60 Direct material cost per unit $30 Direct labor cost per unit $15 Total allocated overhead (1/4 avoidable if eliminate tablets) $40,000 One fourth of the allocated overhead would be avoidable if the tablets were eliminated. How much would Net Income change by if Applesoft were to eliminate the tablets?

-5,000

Wok Around the Clock, Inc., sells specialty woks. In the current year it expects to incur $820,000 in variable costs and $120,000 in fixed costs to make and sell 10,000 woks at $100 each. If Wok Around the Clock accepts a special order from Hard Wok Cafe to purchase 1,000 woks at $75 each plus $1,200 in shipping costs, how much would it make or lose on this special order?

-8,200

Which of the following accounts would be a product cost rather than a period cost? (Select all that apply.)

-depreciation on manufacturing machinery -shipping costs on purchase of inventory -insurance of factory assets -production manager's salary

Which of the following should be used to evaluate the production manager's performance? (Select all that apply.)

-hours spent on production per unit -defect rate of products -cost of direct materials

Salt & Buttery, Inc., is a catering business. Direct labor costs are $15 per hour and overhead is allocated to jobs at a rate of $20 per direct labor hour. Catering for the Morris Lest party cost $800 for direct materials and took 10 direct labor hours. Calculate the total cost of the Morris Lest party.

1,150 (Total Costs = Direct Labor + Direct Material + Overhead Direct Labor = Wage per hour x Number of hours Overhead = Overhead Rate per hour x Number of direct labor hours)

Quiche & Tell, Inc., is a catering business. Direct labor costs are $15 per hour and overhead is allocated to jobs at a rate of $10 per direct labor hour. Catering for the Eggsetera, Inc. party cost $1,000 for direct materials and took 20 direct labor hours. Calculate the total cost of the Eggsetera's party.

1,500 (Total Costs = Direct Labor + Direct Material + Overhead Direct Labor = Wage per hour x Number of hours Overhead = Overhead Rate per hour x Number of direct labor hours)

Match the cost classification need for each of the following managerial decisions. 1. Performance evaluations 2. whether to increase operating leverage 3. inventory on the balance sheet

1. Controllable v. non-controllable 2. variable v. fixed costs 3. product v. period costs

Cyclogy Bikes, Inc., manufactures bikes. Identify each of its costs as a Direct Cost or an Indirect Cost . 1. Rent on the factory 2. labor workers who make the bikes 3. the seats needed to make the bikes 4. wages paid to the factory janitor 5. glue used to adhere the tape on the handle bars

1. Indirect Cost 2. Direct Cost 3. Direct Cost 4. Indirect Cost 5. Indirect Cost

There are many reasons to classify costs in different ways. Match the cost classification with the appropriate purpose for making the classifications listed below (using each one only once). 1. To determine inventory on the balance sheet 2. TO determine amounts to be allocated 3. To determine bonuses 4. To prepare a flexible Budget

1. Product 2. Direct 3. Controllable 4. Variable

There are many reasons to classify costs in different ways. Match the cost classification with the appropriate purpose for making the classifications listed below (using each one only once). 1.To determine the costs that should be debited to Inventory rather than being expensed 2. To calculate the total cost of a cost object 3. To evaluate performance 4. To analyze the effect of changes in volume and cost structures on profit 5. To determine the incremental profits earned from different alternatives

1. Product v. Period Costs 2. Direct v. Indirect Costs 3. Controllable v. Non-controllable 4. Variable v. Fixed Cost 5. Relevant v. Irrelevant Costs

Impress, Inc., makes books and is trying to decide whether one particular book which sells for $25 should be printed in-house or outsourced. For each of the following items, indicate whether it is a quantitative or qualitative factor.

1. Quantitative 2. qualitative 3.Quantitative 4. qualitative 5. Quantitative 6. Quantitative 7. Quantitative 8. qualitative

Impress, Inc., makes books and is trying to decide whether one particular book which sells for $25 should be printed in-house or outsourced. For each of the following items, indicate if it is relevant or irrelevant to the decision. 1. Cost of having the printing done by the printing company 2. salary of the accounting manager of Impress, Inc. 3. Original price of the printing equipment owned by Impress, Inc.

1. Relevant 2. Irrelevant 3. Irrelevant

Impress, Inc., makes books and is trying to decide whether one particular book which sells for $25 should be printed in-house or outsourced. For each of the following items, indicate if it is relevant or irrelevant to the decision. 1. Labor rate for printing 2. Allocated fixed overhead 3. Quality of pages printed by the outside printing company

1. Relevant 2. Irrelevant 3. relevant

The Sweet Dairy Air, Inc., makes and sells ice cream cones. Management is trying to decide whether to have its hourly employees produce the ice cream cones or purchase the cones from an outside vendor. For each of the following items, indicate if it is relevant or irrelevant to this decision. 1. Quality of the ice cream cones from the outside vendor 2. ingredient costs to make the ice cream cones 3. ingredient costs to make the ice cream, 4. salary of Sweet Dairy Air's President

1. Relevant 2. Relevant 3. Irrelevant 4. Irrelevant

Sweet Dairy Air, Inc., has received a special order from a customer to buy 100 pounds of premium ice cream for $10 per pound. Sweet Dairy Air has enough idle capacity to accept the order without incurring any additional fixed costs. 1. Production wages of $2 per pound 2. the $10 selling price for the special offer 3. Ingredient costs of $4 per pound 4. Allocated overhead cost of $1 per pound 4. The normal selling price of $14

1. Relevant 2. Relevant 3. Relevant $. Irrelevant 5. Irrelevant

Put the following steps in an Activity-Based-Costing system in the proper order.

1. Separate total overhead into cost pools 2. Identify a logical cost driver as an allocation base for each cost pool 3. Calculate an overhead rate 4. Allocate the costs to the cost object by multiplying the overhead rate by the actual amount of the cost driver used by the cost object.

The Sweet Dairy Air, Inc., makes and sells ice cream cones. Management is trying to decide whether to have its hourly employees produce the ice cream cones or purchase the cones from an outside vendor. For each of the following items, indicate if it is a quantitative or qualitative factor relative to this decision. 1. Quality of the ice cream cones fro the outside vendor 2. Ingredient costs to make the ice cream cones 3. ingredient costs to make the ice cream 4. delivery reliability 5. wages of the employees

1. qualitative 2. Quantitative 3. Quantitative 4.qualitative 5. Quantitative

Brewed Awakenings, Inc., has received a special order from a customer to buy 1,000 pounds for $6 per pound. Brewed Awakenings has enough idle capacity to accept the order without incurring any additional fixed costs. 1. The special $6 selling price per pound 2. the $8 normal selling price per pound 3. coffee beans at a cost of $3 per pound 4. wages of 5. variable overhead 6. allocated fixed overhead costs

1. relevant 2. irrelevant 3. relevant 4. relevant 5. relevant 6. irrelevant

The Sweet Dairy Air, Inc., makes and sells ice cream cones. Management is trying to decide whether to have its hourly employees produce the ice cream cones or purchase the cones from an outside vendor. For each of the following items, indicate if it is relevant or irrelevant to this decision. 1.Wages of Sweet Dairy Air's employees: 2.Salary of Sweet's Production Manager: 3.Price of the ice cream: 4.

1.Relevant 2.Irrelevant 3. Irrelevant

Seed Food, Inc. expects to sell 20,000 bags of flaxseed at a price of $20 per bag. Direct materials equal $10 per bag, direct labor equals $5 per bag and allocated overhead is fixed and will equal $60,000 per month. Seed Food is considering buying a bagging machine to reduce the time spent filling the bags manually. The depreciation of the machine will increase overhead by $30,000 per year, but the direct labor cost per case is expected to decrease by $2. What would be the change in operating income if it bought the machine?

10,000

Buy & Large, Inc.'s, Purchasing Department's estimated annual costs are $400,000 and the number of purchase orders written is 800,000. The Shoe Department has requested 200,000 purchases during the year for a total of $4,000,000 in purchases. How much of the Purchasing Department's cost should be allocated to the Shoe Department?

100,000

Sleeves, Inc.'s, Purchasing Department's estimated annual costs are $200,000 and the number of purchase orders written is 800,000. The Clothing Department has requested 500,000 purchases during the year for a total of $4,000,000 in purchases. How much of the Purchasing Department's cost should be allocated to the Clothing Department?

125,000 (LO 4.2) The overhead rate to allocate the purchasing department costs to the Clothing Department equals the number of purchase orders from the purchasing department divided by the total number of purchase orders by all departments. This overhead rate is then multiplied by the Clothing Department's purchase orders.

Murphy's Paw produces and sells 1,000 units of a single product per year (with excess capacity of 400 units). The cost of producing and selling a single unit is: Direct material $10 Direct labor 7 Allocated variable overhead 3 Allocated fixed overhead 3 The normal selling price is $50.00 per unit. An order has been received from an overseas company for 100 units at the special price of $40.00 per unit. What would be the additional income (or loss) of taking on this special order?

2,000 (Only the contribution margin (special price minus the variable cost) is relevant. The allocated fixed costs are irrelevant because they will not change with the special order.)

Murphy's Paw produces and sells 1,000 units of a single product per year (with excess capacity of 400 units). The cost of producing and selling a single unit is: Direct material $7 Direct labor 8 Allocated variable overhead 3 Allocated fixed overhead 2 The normal selling price is $50.00 per unit. An order has been received from an overseas company for 100 units at the special price of $40.00 per unit. What would be the additional income (or loss) of taking on this special order?

2,200 (LO 7.3 Only the contribution margin (special price minus the variable cost) is relevant. The allocated fixed costs are irrelevant because they will not change with the special order.)

Seed Food, Inc. expects to sell 20,000 bags of flaxseed at a price of $20 per bag. Direct materials equal $10 per bag, direct labor equals $5 per bag and allocated overhead is fixed and will equal $60,000 per month. Seed Food is considering buying a bagging machine to reduce the time spent filling the bags manually. The depreciation of the machine will increase overhead by $20,000 per year, but the direct labor cost per case is expected to decrease by $2. What would be the change in operating income if it bought the machine?

20,000 (screenshot 3)

The following information is available for Sweet Dairy Air, Inc. The Purchasing Department, which is responsible for purchasing materials for various products, has costs of $63,000. The Janitorial Department has costs of $33,000. Overhead Product 1 Product 2 Product 3 Purchasing 10,000 purchases 25,000 purchases 15,000 purchases Janitorial 1,000 square feet 1,500 square feet 1,500 square feet What is the total amount that should be allocated to Product 1?

20,850

The following information is available for Clean Up, Inc. The Purchasing Department, which is responsible for purchasing materials for various products, is estimated to cost $30,000. The Janitorial Department is estimated to cost of $30,000. Overhead Product 1 Product 2 Product 3 Purchasing 10,000 purchases 25,000 purchases 15,000 purchases Janitorial 1,000 square feet 1,500 square feet 1,500 square feet What is the total amount that should be allocated to Product 2?

26,250

Sofa So Good, Inc., makes three types of sofas in the same factory. Type 1 Sofa's costs consist of the following: Leather $200,000 Factory Supervisor's Salary 20,000 Allocated Glue 200 Factory Janitor's Wages 5,000 Wages Charged to Type 1 Sofas 40,000 Wood 50,000 Calculate the Direct Costs for Type 1 Sofas.

290,000 (Direct Costs include only those costs that are directly traceable to Sofa 1. The direct costs are all of the costs except the salaries of the supervisor and janitor and the indirect allocated cost of the glue.)

BBQ Tanning Beds, Inc., produces and sells tanning beds. Selling Price $200 Direct Materials and Direct Labor $120 Allocated Fixed Manufacturing Costs $300,000 What will the company's breakeven point in units equal if BBQ Tanning Beds were to replace some of its hourly employees with a machine? The labor costs will reduce the cost per bed by $20 but the depreciation on the machine will add $40,000 to the manufacturing costs.

3,400 Contribution Margin (CM) = Sales Price - Variable Cost per unit Breakeven in units = Fixed Cost/CM

BBQ Tanning Beds, Inc., produces and sells tanning beds. Selling Price $200 Direct Materials and Direct Labor $120 Allocated Fixed Manufacturing Costs $300,000 What will the company's breakeven point in units equal if BBQ Tanning Beds were to replace some of its hourly employees with a machine? The labor costs will reduce the cost per bed by $20 but the depreciation on the machine will add $60,000 to the manufacturing costs.

3,600

Microhard produces tablets, laptops and televisions. Microhard typically sells 1,000 tablets a year. The tablet information is as follows: Selling price per unit $70 Direct material cost per unit $30 Direct labor cost per unit $10 Total unavoidable allocated overhead $47,000 How much would Net Income decrease if Microhard were to eliminate the tablets?

30,000

Seed Food, Inc. expects to sell 20,000 bags of flaxseed at a price of $20 per bag. Direct materials equal $10 per bag, direct labor equals $5 per bag and allocated overhead is fixed and will equal $60,000 per month. Seed Food is considering buying a bagging machine to reduce the time spent filling the bags manually. The depreciation of the machine will increase overhead by $10,000 per year, but the direct labor cost per case is expected to decrease by $2. What would be the change in operating income if it bought the machine?

30,000

Microhard produces tablets, laptops and televisions. Microhard typically sells 1,000 tablets a year. The tablet information is as follows: Selling price per unit $70 Direct material cost per unit $30 Direct labor cost per unit $10 Total unavoidable allocated overhead $45,000 How much would Net Income decrease if Microhard were to eliminate the tablets?

30,000 LO 7.4 Should the product be eliminated, the company will lose the contribution margin. In this example, the allocated overhead is unavoidable and thus is irrelevant to the decision. If some of the overhead is avoidable, then the loss in contribution margin should be compared to the savings in overhead. If the contribution margin is less than the savings, then the product should be eliminated.

BBQ Tanning Beds, Inc., produces and sells tanning beds. Selling Price $200 Direct Materials and Direct Labor $120 Allocated Fixed Manufacturing Costs $300,000 What will the company's breakeven point in units equal if BBQ Tanning Beds were to replace some of its hourly employees with a machine? The labor costs will reduce the cost per bed by $20 but the depreciation on the machine will add $100,000 to the manufacturing costs.

4,000 Module 7, LO 6 Contribution Margin (CM) = Sales Price - Variable Cost per unit Breakeven in units = Fixed Cost/CM

French Confection, Inc., allocates overhead using direct labor hours as the allocation activity. The following information was estimated at the beginning of the year: Estimated Manufacturing Overhead $100,000 Estimated Machine Hours 4,000 Estimated Direct Labor Hours 5,000 During the year, the bakery department used 800 machine hours and 2,000 direct labor hours. How much manufacturing overhead was allocated to the bakery department during the year?

40,000 (OH rate = Estimated OH / Estimated Total Level of Activity (direct labor hours) Then, determine total allocated OH by taking the OH rate x Actual Level of Activity for the Cost Object (direct labor hours used by the bakery department).)

The following information is available for Clean Up, Inc. The Purchasing Department, which is responsible for purchasing materials for various products, is estimated to cost $50,000. The Janitorial Department is estimated to cost of $40,000. Overhead Product 1 Product 2 Product 3 Purchasing 10,000 purchases 25,000 purchases 15,000 purchases Janitorial 1,000 square feet 1,500 square feet 1,500 square feet What is the total amount that should be allocated to Product 2?

40,000 (screenshot #2)

Big Seats has the capacity to produce 100,000 sofas per year but only produces 80,000 sofas per year. The sale price is $1,000 each. Direct materials equals $200 per sofa, direct labor equals $200 per sofa, and allocated overhead equals $100,000 per year. Buy & Large offers to buy an additional 1,000 sofas but is only willing to pay $800 per sofa. What is the additional profit (loss) of accepting the offer?

400,000

Daily Kneads, Inc., is thinking about having one of its products made by a supplier. The supplier will charge $6,000 for 1,000 units. Currently, Daily Kneads' costs to make 1,000 units of this product are as follows: Cost per unit Cost of 1,000 units Direct labor $4 $4,000 Direct materials $1 $1,000 Allocated Unavoidable Fixed Costs $2 $2,000 Total costs $7 $7,000 Calculate the relevant incremental cost of making each unit: $[a] per unit

5 (The relevant costs are those that will change as a result of the decision. In this example, the variable direct labor and materials will be eliminated if the company outsources and thus are relevant. The allocated costs will not change and thus are irrelevant.)

Daffy Duct, Inc., has the capacity to produce 12,000 cases of duct tape per year but only produces and sells 10,000 cases at $50 per case. The direct materials equals $190,000, direct labor equals $100,000, and overhead equals $100,000. Sixty percent of the manufacturing overhead is variable. The forty percent of fixed overhead is allocated equally to all products. Dewey, Cheatum & Howe has offered to purchase 1,000 cases but at a reduced price of $40 per case. What is the additional profit (loss) of accepting this offer?

5,000

Buy & Large, Inc.'s, Purchasing Department's estimated annual costs are $400,000 and the number of purchase orders written is 800,000. The Shoe Department has requested 100,000 purchases during the year for a total of $4,000,000 in purchases. How much of the Purchasing Department's cost should be allocated to the Shoe Department?

50,000 (LO 4.2) The overhead rate to allocate the purchasing department costs to the Shoe Department equals the annual costs of purchases by the purchases department divided by the total number of purchase orders by all departments. This overhead rate is then multiplied by the Shoe Department's cost.

Quiche & Tell, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $15,000 for 3,000 quiches. The costs per quiche to make this product include: Cost per Quiche Production Manager's Salary $1 Direct Labor $3 Direct Materials $3 Allocated Unavoidable Corporate Overhead $5 Calculate the relevant incremental cost per quiche of making the product. Do not include a dollar sign ($) in your answer.

6

Quiche & Tell, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $15,000 for 3,000 quiches. The costs per quiche to make this product include: Cost per Quiche Production Manager's Salary $1 Direct Labor $4 Direct Materials $2 Allocated Unavoidable Corporate Overhead $5 Calculate the relevant incremental cost per quiche of making the product.

6

Lawn and Order Company manufactures industrial sprinklers and uses an activity-based costing system to allocate overhead to its products. Each sprinkler consists of 6 separate parts totaling $3 in direct materials, $2 in direct labor and requires 1 hour of machine time to produce. Additional information follows: Overhead Cost Pools Cost Drivers Allocation Overhead Rate Materials handling Number of parts $0.40 per part Machining Machine hours $1.50 per machine hour Assembling Number of parts $0.40 per part Inspecting Number of finished units $0.30 per finished unit Determine the amount of overhead allocated to each sprinkler.

6.60 (o get the total cost allocated to each sprinkler, you must take each overhead rate and multiply it by the planned activity for each item. Then, add all four cost components together.)

Chain Reaction, Inc. allocates overhead using machine hours as the allocation activity. The following information was estimated at the beginning of the year: Estimated Manufacturing Overhead $300,000 Estimated Machine Hours 10,000 Estimated Direct Labor Hours 20,000 During the year, it took 2,000 machine hours and 6,000 direct labor hours to produce the mountain bikes. How much manufacturing overhead was allocated to the mountain bikes during the year?

60,000 (To determine the total Manufacturing Overhead (OH) allocated during the year, you must first calculate the Overhead Rate as follows: OH rate = Estimated Total OH / Estimated Total Level of Activity (machine hours) Then, determine total allocated OH by taking the OH rate x Actual Activity for the cost object (machine hours used making the mountain bikes).

Lord of the Fries, Inc., makes industrial sized bags of fries in the same factory. The fries' costs consist of the following: Wages of Factory Workers $500,000 Potatoes 200,000 Factory Rent 50,000 Allocated Ingredients (salt and preservatives) 400 Factory Supervisor Salary 10,000 Sales Commissions 50,000 Calculate the Direct Costs for the industrial sized bags of fries.

700,000 (The direct costs are materials, potatoes, and labor, factory wages. The other costs, rent, salary of the supervisor, the indirect allocated ingredients, and sales commissions are indirect costs.)

Chain Reaction, Inc. allocates overhead using machine hours as the allocation activity. The following information was estimated at the beginning of the year: Estimated Manufacturing Overhead $400,000 Estimated Machine Hours 10,000 Estimated Direct Labor Hours 20,000 During the year, it took 2,000 machine hours and 6,000 direct labor hours to produce the mountain bikes. How much manufacturing overhead was allocated to the mountain bikes during the year?

80,000

Big Seats has the capacity to produce 100,000 sofas per year but only produces 80,000 sofas per year. The sale price is $1,000 each. Direct materials equals $200 per sofa, direct labor equals $200 per sofa, and allocated overhead equals $100,000 per year. Buy & Large offers to buy an additional 2,000 sofas but is only willing to pay $800 per sofa. What is the additional profit (loss) of accepting the offer?

800,000

Big Seats has the capacity to produce 100,000 sofas per year but only produces 80,000 sofas per year. The sale price is $1,000 each. Direct materials equals $200 per sofa, direct labor equals $200 per sofa, and allocated overhead equals $100,000 per year. Buy & Large offers to buy an additional 2,000 sofas but is only willing to pay $800 per sofa. What is the additional profit (loss) of accepting the offer?

800,000 (The allocated overhead is irrelevant since the costs will not change if the company decides to accept the special order. Thus, the special price should be compared to the relevant incremental costs (only the costs that will increase if the order is accepted), not the total cost.)

Salt & Buttery, Inc., is a catering business. Direct labor costs are $11 per hour and overhead is allocated to jobs at a rate of $20 per direct labor hour. Catering for the Morris Lest party cost $800 for direct materials and took 5 direct labor hours. Calculate the total cost of the Morris Lest party.

955 (Total Costs = Direct Labor + Direct Material + Overhead Direct Labor = Wage per hour x Number of hours Overhead = Overhead Rate per hour x Number of direct labor hours)

Which of the following should NOT be used to evaluate the production manager's performance?

Depreciation on factory

The following operating results relate to the operations of Sea the World Cruises, Inc. Gift Shop Spa Services Casino Sales $5,000,000 $7,000,000 $10,000,000 Variable Costs 4,500,000 3,000,000 10,500,000 Fixed Costs (all allocated) 600,000 1,000,000 2,000,000 The total fixed costs will remain the same even if one of the above operations is dropped. Identify which (if any) should be eliminated.

Gift Shop: Keep Spa Services: Keep Casino: Eliminate

Applesoft produces many products. Product X has revenues of $8,000,000, direct material costs of $4,500,000, direct labor costs of $3,000,000, and allocated, unavoidable fixed costs of $2,000,000. Will eliminating product X increase Applesoft's Net Income?

No

Daily Kneads, Inc., is thinking about having one of its products made by a supplier. The supplier will charge $6,000 for 1,000 units. Currently, Daily Kneads' costs to make 1,000 units of this product are as follows: Cost per unit Cost of 1,000 units Direct labor $4 $4,000 Direct materials $1 $1,000 Allocated unavoidble overhead $2 $2,000 Total costs $7 $7,000 Should the product be outsourced?

No (screenshot 5)

A manager is considering replacing a piece of old equipment for a more efficient one. It expected that annual maintenance cost for the new equipment will be $2,000, which is $10,000 less than the cost currently being incurred to maintain the old equipment. If the new equipment is purchased, the old equipment will be sold for scrap. Which of the following costs is NOT relevant to this decision?

The original cost of the old equipment

A product should be eliminated if its _____.

contribution margin is negative

Which of the following statements is true concerning the allocation of overhead?

indirect costs are allocated to cost objects to determine a more accurate cost

It is necessary to allocate costs because ______.

often common resources are shared by many different products, services, or departments

For a manufacturing company, which of the following is an example of a period cost rather than a product cost?

wages of sales persons