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Question 1 Abigail Corporation produces a custom...




Question 1 Abigail Corporation produces a custom mountain bike that sells for $800. During its first year of operations, Abigail produced 1,000 bikes and sold 900 bikes. The costs of production for each bike are: Direct materials $100 Direct labor $50 Variable Overhead $30 Additionally, the annual fixed overhead is $200,000. Determine the following: 2. What is the product cost of one bike using the variable costing method? 3. What is the product cost of one bike using the full costing method? 4. Under variable costing, are fixed overhead costs a product cost or a period cost? Question 2 Costs associated with two alternatives, code-named Q and R, being considered by Albiston Corporation are listed below: Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives? b. What is the differential cost between the two alternatives? Question 3 The management of Kinion Corporation is considering the purchase of a machine that would cost $170,000, would last for 7 years, and would have no salvage value. The machine would reduce labor and other costs by $50,000 per year for each of the 7 years. The required rate of return is 16%. Show your work! Required: 2. Determine the payback period. 3. Should the company purchase the machine? Question 4 Darter Company manufactures two products, Product F and Product G. The company expects to produce and sell 2,600 units of Product F and 6,000 units of Product G during the current year. The company uses activity-based costing to compute unit product costs for external reports. Data relating to the company's three activity cost pools are given below for the current year: Required: Using the activity-based costing approach 1. Determine the overhead rate for each of the three cost pools. 3. Determine the overhead cost per unit for Product G.. Question 5 Kirsten Corporation makes 100,000 units per year of a part called a B345 gasket for use in one of its products. Data concerning the unit production costs of the B345 gasket follow: An outside supplier has offered to sell Kirsten Corporation all of the B345 gaskets it requires. If Kirsten Corporation decided to discontinue making the B345 gaskets, 25% of the above fixed manufacturing overhead costs could be avoided. Required: Assume Kirsten Corporation has no alternative use for the facilities presently devoted to production of the B345 gaskets. If the outside supplier offers to sell the gaskets for $0.46 each, should Kirsten Corporation accept the offer? Fully support your answer with appropriate calculations.


Paper#9425 | Written in 18-Jul-2015

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