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Part A

The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available:

	Monthly Fixed Cost		Variable Cost Per Deb Sold
Sales commissions			$	0.90
Shipping			$	1.40
Advertising	$	50,000	$	0.20
Executive salaries	$	60,000
Depreciation on office equipment	$	20,000
Other	$	40,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 15,000 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:

Multiple Choice

$120,000

$170,000

$150,000

$130,000

Part B

Standahl Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $39,590 per month plus $2,649 per flight plus $4 per passenger. The company expected its activity in August to be 82 flights and 294 passengers, but the actual activity was 85 flights and 297 passengers. The actual cost for plane operating costs in August was $255,690.

The activity variance for plane operating costs in August would be closest to:

Multiple Choice

$7,959 F

$2,294 U

$7,959 U

$2,294 F

Part C

Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period:

	Total Company		Southern Division			Northern Division
Sales	$	418,000	$	193,000		$	225,000
Variable expenses	$	130,880	$	79,130		$	51,750
Traceable fixed expenses	$	186,000	$	77,000		$	109,000
Common fixed expense	$	79,420	$	36,670		$	42,750

The common fixed expenses have been allocated to the divisions on the basis of sales.

The Southern Divisions break-even sales is closest to:

Multiple Choice

$265,119

$386,408

$130,508

$192,661

Part D

Standahl Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $39,590 per month plus $2,649 per flight plus $4 per passenger. The company expected its activity in August to be 82 flights and 294 passengers, but the actual activity was 85 flights and 297 passengers. The actual cost for plane operating costs in August was $255,690.

The spending variance for plane operating costs in August would be closest to:

Multiple Choice

$2,294 F

$10,253 U

$2,294 U

$10,253 F

Part E

Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity-based costing system:

Overhead costs:
Wages and salaries	$	70,000
Other expenses		50,000
Total	$	120,000

Distribution of resource consumption:

	Activity Cost Pools
	Making Bouquets	Delivery		Other	Total
Wages and salaries	70%	20%		10%	100%
Other expenses	45%	25%		30%	100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.

The amount of activity for the year is as follows:

Activity Cost Pool	Activity
Making bouquets	40,000	bouquets
Delivery	1,000	deliveries

What would be the total overhead cost per delivery according to the activity-based costing system? In other words, what would be the overall activity rate for the deliveries activity cost pool? (Round to the nearest whole cent.)

Multiple Choice

$26.50

$30.00

$24.00

$27.00

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