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The building maintenance department for Jones Manu...




The building maintenance department for Jones Manufacturing Company budgets annual costs of $4,200,000 based on the expected operating level for the coming year. The costs are allocated to two production departments. The following data relate to the potential allocation bases: Production Dept. 1 Production Dept. 2 Square footage 15,000 45,000 Direct labor hours 25,000 50,000 If Jones assigns costs to departments based on square footage, how much total costs will be allocated to Production Department 1? 1-$1,400,000 2-$1,050,000 3-$1,575,000 4-$2,100,000 A company is currently making a necessary component in house (the company is producing the component for its own use). The company has received an offer to buy the component from an outside supplier. A machine is being rented to make the component. If the company were to buy the component, the machine would no longer be rented. The rent on the machine, in relation to the decision to make or buy the component, is: 1-sunk and therefore not relevant. 2-avoidable and therefore not relevant. 3-avoidable and therefore relevant. 4-unavoidable and therefore relevant. YXZ Company?s market for the Model 55 has changed significantly, and YXZ has had to drop the price per unit from $275 to $135. There are some units in the work in process inventory that have costs of $160 per unit associated with them. YXZ could sell these units in their current state for $100 each. It will cost YXZ $10 per unit to complete these units so that they can be sold for $135 each. When the incremental revenues and expenses are analyzed, what is the financial impact? 1-$25 per unit profit if the units are completed 2-$125 per unit if the units are completed 3-$65 per unit loss if the units are completed 4-$150 per unit loss if the units are completed


Paper#5995 | Written in 18-Jul-2015

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