Solved by verified expert :1.(TCO1)ABC systems create(Points : 5)
one large cost pool .
homogenous activity-related cost pools.
activity-cost pools with a broad focus.
activity-cost pools containing many direct costs.
2.(TCO 1) Merriamn Company
provides the following ABC costing information:
Activities
Total
Costs
Activity-cost
drivers
Account
inquiry hours
$400,000
10,000
hours
Account
billing lines
$280,000
4,000,000
lines
Account
verification accounts
$150,000
40,000
accounts
Correspondence
letters
$
50,000
4,000
letters
Total
costs
$880,000
The
above activities are used by Department A and B as follows:
Department
A
Department
B
Account
inquiry hours
2,000
hours
4,000
hours
Account
billing lines
400,000
lines
200,000 lines
Account
verification accounts
10,000
accounts
8,000
accounts
Correspondence
letters
1,000
letters
1,600
letters
How
much of the inquiry cost will be assigned to Department A?
(Points :
5)
$80,000
$400,000
$160,000
None of the above
3.(TCO 2)A master budget(Points : 5)
includes only financial aspects of a plan and excludes
nonfinancial aspects.
includes broad expectations and visionary results.
is an aid to coordinating what needs to be done to
implement a plan.
should not be altered after it has been agreed upon.
4.(TCO
2) White planned to use $82 of material per unit but actually used $80 of
material per unit, and planned to make 1,200 units but actually made 1,000
units. The sales-volume variance is(Points : 5)
$2,000 favorable.
$14,000 unfavorable.
$16,400 unfavorable.
$2,400 favorable.
5.(TCO
3) Which of the following does NOT represent a cause-and-effect
relationship?(Points : 5)
It makes sense that if a
complex product has a large number of parts, it will take longer to assemble
than a simple product with fewer parts.
Material costs increase as the
number of units produced increases.
A company is charged 40 cents
for each brochure printed and mailed.
Utility costs increase at the
same time that insurance costs increase.
6.(TCO 4)Relevant costs of a make-or-buy decision include all of
the following EXCEPT(Points
: 5)
fixed salaries that will not be incurred if the part is
outsourced.
current direct material costs of the part.
special machinery for the part that has no resale value.
material-handling costs that can be eliminated.
7.(TCO
5) Constraints may include(Points
: 5)
the availability of direct
materials in manufacturing.
linear square feet of display
space for a retailer.
direct labor in the service
industry.
All of the above
8.(TCO
5) Jensen Company has relevant costs of $80 per unit to manufacture Part
A. A current supplier offers to make Part A for $70 per
unit. If capacity is constrained, the opportunity cost of buying Part
A from the supplier is(Points
: 5)
0.
$10,000.
$70,000.
indeterminable.
9.(TCO 3)The cost components of an air conditioner include $35
for the compressor, $11.50 for the sheet-molded compound frame, and $80 per
unit for assembly. The factory machines and tools cost is
$55,000. The company expects to produce 1,500 air conditioners in the
coming year. What cost function best represents these costs?(Points : 5)
y= 1500 + 126.5X
y =1,500+55,000X
y=55,000+126.50X
y=55,000+1,500X
10.(TCO 4)Sunk costs(Points
: 5)
are future
costs.
are past
costs.
have future implications.
are relevant to all decisions.
Essays
1.(TCO 1)
Trustme
Vehical Rental Corporation has two departments, Car Rental and Truck
Rental. Central costs may be allocated to the two departments in
various ways.
Car
Rental Truck Rental
Number
of vehicles in
fleet
700
300
Number
of
employees
150
50
Sales $1,500,000
$750,000
1.
If administrative expense of $125,000 is allocated on the basis of number
of employees, the amount allocated to the truck rental department would be
2.If administrative expense of
$125,000 is allocated on the basis of number of employees, the amount
allocated to the car rental department would be
3.If advertising expense of
$150,000 is allocated on the basis of sales, the amount allocated to the
car rental department would be
4.If advertising expense of
$225,000 is allocated on the basis of sales, the amount allocated to the
truck rental department would be
5.If the facility lease expense of
$350,000 is allocated on the basis of vehicles in the fleet, the amount allocated
to the truck rental department would be
(Points : 25)
2.(TCO 2) Favata Company has the
following information:
Month
Budgeted Sales
June $60,000
July
51,000
August
40,000
September
70,000
October
72,000
In
addition, the cost of goods sold rate is 70% and the desired inventory
level is 30% of next month’s cost of sales.
Prepare
a purchases budget for July through September.
(Points : 25)
3.(TCO 3) As part of his job as
cost analyst, Max Thompson collected the following information concerning
the operations of the Machining Department:
Observation Machine-hours Total Operating Costs
January
4,000
$45,000
February
4,600
49,500
March
3,800
45,750
April
4,400
48,000
May
4,500
49,800
Use
the high-low method to determine the estimating cost function with
machine-hours as the cost driver.
(Points : 25)
4.
(TCO
5) Kirkland Company manufactures a part for use in its production of
hats. When 10,000 items are produced, the costs per unit are:
Direct materials $0.60
Direct manufacturing
labor
3.00
Variable manufacturing
overhead
1.20
Fixed manufacturing
overhead
1.60
Total $6.40
Mike
Company has offered to sell to Kirkland Company 10,000 units of the part
for $6.00 per unit. The plant facilities could be used to manufacture
another item at a savings of $9,000 ifKirklandaccepts the offer. In addition, $1.00 per
unit of fixed manufacturing overhead on the original item would be
eliminated.
a.
What is the relevant per unit cost for the original part?
b.
Which alternative is best for Kirkland Company? By how much?
(Points : 25)
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