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accounting assignment-week 4 midterm




Question;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$160,000None 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 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 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+55,000Xy=55,000+126.50Xy=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);Page:12


Paper#43557 | Written in 18-Jul-2015

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