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1)

Assume the following information for a company that produced and sold 10,000 units during its first year of operations:

	Per Unit	Per Year
Selling price	$ 200
Direct materials	$ 66
Direct labor	$ 50
Variable manufacturing overhead	$ 9
Sales commission	$ 8
Fixed manufacturing overhead		$ 300,000

Using variable costing and based solely on the information provided, what is the companys contribution margin per unit?

Multiple Choice

$45

$37

$67

$75

2)

Assume the following information for a company that produced and sold 10,000 units during Year 1. It also produced 15,000 units and sold 12,000 units during Year 2, while producing 12,000 units and selling 15,000 units in Year 3.

	Per Unit	Per Year
Selling price	$ 240
Direct materials	$ 87
Direct labor	$ 56
Variable manufacturing overhead	$ 10
Sales commission	$ 11
Fixed manufacturing overhead		$ 450,000
Fixed selling and administrative expense		$ 250,000

Using variable costing, what is the variable cost of goods sold in Year 3?

Multiple Choice

$2,395,000

$2,295,000

$2,360,000

$2,460,000

Assume a company manufactures only two products14,000 units of Product A and 6,000 units of Product B. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B:

Activity Cost Pool	Activity Measure	Estimated Overhead Cost	Expected Activity
Machining	Machine-hours	$ 300,000	18,750	MH
Machine setups	Number of setups	$ 150,000	200	Setups
Product design	Number of products	$ 78,000	2	Products

Activity Measure	Product A	Product B
Machine-hours	9,000	6,000
Number of setups	50	150
Number of products	1	1

Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product A?

Multiple Choice

$220,500

$200,500

$230,500

$210,500

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