solution

Question 1 (1 point)

A typical use of managerial accounting is to:

Question 1 options:

help investors and creditors assess the financial position of the company.

help management get a clean audit report

help the marketing manager decide which product promotion to implement

help the SEC decide whether management is in compliance of its policies.


Three costs incurred by Pitt Company are summarized below:

1,000 units 2,000 units

Cost A $10,000 $15,000

Cost B $21,000 $21,000

Cost C $16,000 $32,000

Which of these costs are variable?

Question 2 options:

A, B, and C

A and B

A only

C only


Bubba'sSteakhousehas budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,550; depreciation, $790; and other fixed costs, $460. Each steak dinner sells for $12.20 each. How much would Shulas profit increase if 10 more dinners were sold?

Your Answer:Ans: $64

Question 3 options:

Answer


Bellfont Company produces door stoppers.August production costs are below:

Door Stoppers produced76,000

Direct material (variable) $20,000

Direct labor (variable) 40,000

Supplies (variable) 20,000

Supervision (fixed)28,500

Depreciation (fixed) 23,100

Other (fixed)4,300

In September,Bellfont expects to produce 100,000 door stoppers. Assuming no structural changes, what is Bellfonts production cost perdoor stopperfor September?

Your Answer:Ans: 1.61

Question 4 options:

Answer


Aaron's chairs is in the process of preparing a production cost budget for August. Actual costs in July for 120chairs were:

Materials cost$4,750

Labor cost2,960

Rent1,500

Depreciation2,500

Other fixed costs3,200

Materials and labor are the only variable costs. If production and sales are budgeted to increase to100 chairs in August, how much is the expected total variable cost on the August budget?

Your Answer:Ans: $6425Question 5 options:

Answer


Carry-ALLplans to sell 1,300 carriers next year and has budgeted sales of $46,000 and profits of $22,000. Variable costs are projected to be $20 per unit.Michael Co. offers to pay $23,400 to buy670 units from Carry-ALL. Total fixed costs are $7,000 per year. This offer does not affect Carry-ALL's other planned operations. The incremental revenues for this situation are

Your Answer:Ans: 23400Question 6 options:

Answer


Stellar Company has the following sales, variable cost, and fixed cost. If sales increase by $10,000 then their profit increases/decreases by how much?

Sales $50,000

Variable Costs $8,300

Fixed Costs $28,000

Your Answer:Ans: Increase by $8340Question 7 options:

Answer


Susanis trying to decide whether or not to attend college during the next 12-week session. She has the following options:

1. Attend college full-time at a cost of $1,200.

2. Attend college part-time at a cost of $700 and work part-time earning $2,000.

3. Work full-time earning $5,000.

What is Susan's incremental profit if she chooses option 3 over option 2?

Your Answer:Ans: $3700

Question 8 options:

Answer


Total costs were $76,700 when29,000 units were produced and $93,600 when40,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units.

Your Answer:Ans: $81309.09

Question 9 options:

Answer


ProfessionalUniversity teaches a large range of undergraduate courses. It is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below

SemesterStudent Credit HoursFacilities Cost

Spring 2007250,000$500,000

Fall 2004300,000$530,000

Using the high low method, with student credit hours as the activity driver, what is the equation for facilities cost (FC) as a function of student credit hours?

Question 10 options:

FC = $350,000 + $0.60 / student credit hour

FC = -$585,100 + $1.67 / student credit hour

FC = $1.77 / student credit hour

FC = $2 / student credit hour


Randy's tirelandmakes a product that sells for $65 per unit and has $49 per unit in variable costs. Annual fixed costs are $24,000. If Rambles sells 10 units less than breakeven, how much loss would the company recognize on its income statement?

Your Answer:Ans : $160


Answer


RitzFurniture has a contribution margin ratio of 0.15. If fixed costs are $177,900, how many dollars of revenue must the company generate in order to reach the break-even point?


Answer


U.S. TelephoneCellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10% (based on the unit sales price per phone). Fixed manufacturing costs total $1,270 per month, while fixed selling and administrative costs total $2,260. How many phones must be sold to achieve the breakeven point?

Your Answer:Ans: 88.25Question 13 options:

Answer


Swimkids is a swimsuit manufacturer. They sell swim suits at a selling price is $30 per unit.Swimkids variable costs are $18 per unit. Fixed costs are $70,300.Swimkids expects sales of $274,800 next year. What isSwimkids's margin of safety?

Your Answer:Ans: 99050


Answer


LambardiCompany sells 3 types of bags.Bag A sells for $20 and has variable cost of $9.00 per unit.Bag B sells for $14 and has variable cost of $12.00 per unit. Bag C sells for $7 and has variable costs of $6.00 per unit. Lambardi sells in a mix of 2 units of A, 3 units of B and 5 units of C. What is the weighted average contribution margin per unit for Lambardi?



Answer


Product A has a contribution margin per unit of $500 and required 2 hours of machine time. Product B has a contribution margin per unit of $1,000 and requires 5 hours of machine time. How much of each product should be produced given there are 100 hours of available machine time?


50 units of A and 25 units of B.

25 units of B.

50 units of A.

None of the above


DelfiCompany produces two models of seats,Toro and Prep. Information regarding these products for May follows:

ToroPrep

Number of units3,0007,000

Sales revenue$120,000$140,000

Variable costs60,00042,000

Fixed costs24,00050,000

Net Income$36,000$48,000

Pounds of plastic to produce one bucket4.01.6

Contribution margin per unit$20$14

Due to increased demand of plastic in the market, Delfi Company can obtain only 9,000 pounds of plastic per month. Delfi can sell as manyseats as it can produce of either model. How many of each model shouldDelfi produce to maximize profit in May considering the constraint?


Toro: 0; Prep: 4,375

Toro: 2,250; Prep: 0

Toro: 1,125; Prep: 2,812

Toro: 0; Prep: 5,625


AbagailCorp. uses activity-based costing system with three activity cost pools. The following information is provided:

Costs: Wages and salaries $ 202,000

Depreciation 105,000

Utilities 119,000Total $440,000

Activity Cost Pools

AssemblySetting Up Other

Wages and salaries 0.56 30% 10%

Depreciation0.32 45% 20%

Utilities0.2340% 30%

How much total cost would be allocated to the Assembly activity cost pool?


Answer


Maxx Inc. has provided the following data from its activity-based costing system:

Activity Cost Pools Total Cost Total ActivityDesigning products $377,8006,310 product design hours

Setting up batches $52,678 7366 batch set-ups

Assembling products $25,1224,018 assembly hours

The activity rate for the designing products activity cost pool is:

Your Answer:Ans: $59.87 per product design hoursQuestion 19 options:

Answer


SashaCompany allocates the estimated $196,100 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the number of employees using the direct method. Information regarding costs and employees follows:

DepartmentEmployees

Accounting4

Production32

Sales15

How much of the accounting department costs will be allocated to the production?


Answer


MedusaCompany allocates costs from the payroll department (S1) and the maintenance department (S2) to the molding (P1), finishing (P2), and packaging (P3) departments. Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet which the production department occupies within the factory. Information about the departments is presented below:

Number ofNumber of Square

DepartmentCostsEmployeesFeet Occupied

Payroll (S1)$143,00022,000

Maintenance (S2)$220,000864,000

Molding (P1)60100,000

Finishing (P2)4960,000

Packaging (P3)2040,000

Medusauses the direct method to allocate costs. Round all answers to the nearest dollar. What amount of the payroll department costs will be allocated to the molding department?



Answer


TheManassas Company has55 obsoletekeyboards that are carried in inventory at a cost of $9,600. If these keyboards are upgraded at a cost of $7,500, they could be sold for $19,100. Alternatively, thekeyboards could be sold as is for $7,800. What is the net advantage or disadvantage of re-working the keyboards?

Your Answer:Ans: $3800Question 22 options:

Answer


RitzCompany sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below:

Cost PoolTotal CostsCost DriverAnnual Activity

Packaging and shipping$162,400Number of boxes shipped25,000boxes

Final inspection$197,600Number of individual items shipped96,500items

General operations and supervision$80,600Number of orders8,100orders

During the period, the Far East sales office generated656 orders for a total of6,130 items. These orders were shipped in1,408 boxes. What amount of shipping department costs should be allocated to these sales?



Answer


Baller Financial is a banking services company that offers many different types of checking accounts. The bank has recently adopted an activity-based costing system to assign costs to their various types of checking accounts. The following data relate to the money market checking accounts, one of the popular checking accounts, and the ABC cost pools: Annual number of accounts =54,000 accounts Checking account cost pools:

Cost PoolCostCost Drivers

Returned check costs$2,910,000Number of returned checks

Checking account reconciliation costs59,000Number of account reconciliation requests

New account setup635,000Number of new accounts

Copies of cancelled checks397,000Number of cancelled check copy requests

Online banking web site maintenance193,000Per product group (type of account)

Annual activity information related to cost drivers:

Cost PoolAll ProductsMoney Market Checking

Returned check200,000 returned checks18,000

Check reconciliation costs397,000 checking account420

New accounts50,000 new accounts15,000

Cancelled check copy requests98,000 cancelled check60,000

Web site costs6types of accounts1

Calculate the overhead cost per account for the Money Market Checking.


Answer


Sosa Company has $39 per unit in variable costs and $1,900,000 per year in fixed costs. Demand is estimated to be138,000 units annually. What is the price if a markup of 35% on total cost is used to determine the price?


Answer


Bob'sCompany sells one product with a variable cost of $5 per unit. The company is unsure what price to charge in order to maximize profits. The price charged will also affect the demand. If fixed costs are $100,000 and the following chart represents the demand at various prices, what price should be charged in order to maximize profits?

Units Sold Price

30,000 $10

40,000 $9

50,000 $8

60,000 $7


$10

$9

$8

$7


A retailer purchased some trendy clothes that have gone out of style and must be marked down to 30% of the original selling price in order to be sold. Which of the following is a sunk cost in this situation?


the original selling price

the anticipated profit

the original purchase price

the current selling price


Carlton Products Company has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability. Results appear below:

Cost PoolAnnual CostCost DriverAnnual Driver Quantity

Processing electronic orders$1,000,000Number of orders500,000

Processing non-electronic orders$2,000,000Number of orders400,000

Picking orders$3,000,000Number of different products ordered800,000

Packaging orders$1,500,000Number of items ordered50,000,000

Returns$2,000,000Number of returns50,000

If all costs were assigned to customers based on the number of items ordered, what would be the cost per item ordered?

Your Answer:Ans: .19Question 28 options:

Answer


Costa Company has a capacity of 40,000 units per year and is currently selling 35,000 for $400 each. Barton Company has approached Costa about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Costa $20 per unit when compared to the normal packaging cost. Normally, Costa has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Costa were to accept this special order?


Profits would increase $40,000.

Profits would increase $60,000.

Profits would decrease $200,000.

Profits would increase $80,000


A company has $6.60 per unit in variable costs and $3.30 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.51, what price should be charged if 55,000 units are expected to be sold?



Answer


Customer profitability analysis might result in:Question 31 options:

dropping some customers that are unprofitable.

lowering price or offering incentives to profitable customers.

giving incentives to all customers to place orders online.

All of the above.


TheEstrada Company uses cost-plus pricing with a 0.43 mark-up. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $4.70. In addition, the company incurs $190,400 in fixed costs annually. If demand falls to79,900 units and the company wants to continue to earn a0.43 return, what price should the company charge?



Answer


A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $122.00 per unit. The company requires a profit of0.22 of selling price. How much is the target cost per unit?


Answer


A company using activity based pricing marks up the direct cost of goods by 0.27 plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $6.50 per order placed; $2.80 per separate item ordered; $27.10 per return. A customer places7 orders with a total direct cost of $2,700, orders300 separate items, and makes3 returns. What will the customer be charged?



Answer


A law firm uses activity-based pricing. The companys activity pools are as follows:

Cost PoolAnnual Estimated CostCost DriverAnnual Driver Quantity

Consultation196,000Number of consultations80consultations

Administrative Costs134,000Admin labor hours9,800labor hours

Client Service79,000Number of clients120clients

The firm had two consultations with this client and required 130 administrative labor hours. What additional costs will be charged to this customer?


Answer

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