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Use the following information to answer questions 2-3: Ellyn's Doll House Company (EDHC) manufactures large and small doll houses. Historically, EDHC has utilized a traditional job order costing system to allocate manufacturing overhead. They are considering switching to an Activity Based Costing System (All per unit answers are rounded to the nearest dollar EDHC has the following Direct Labor and Direct Material Costs for a large doll house and a small doll house. Large Direct Materials Direct Labor $40 $30 Small $20 $18 325000 = 15 EDHC does an Activity Based Cost Analysis and identifies 3 major activities. Here is an analysis of their findings: Expected Activity Activity/Measure Overhead Large Small POHR- Labor related/direct labor hrs $500,000 10,000 15,000 Machine related/machine hrs $225,000 15,000 30,000 Production orderso. of orders $175,000 150 200 15000 Overhead is applied on the basis of machine hours. It takes 5 machine hours to produce a large doll house and 4 machine hours to produce a small doll house. EDHC produces 3,000 large doll houses and 7,500 small doll houses in a year. Actual shis per dont (15) - 75 Under the traditional job order costing system, what is the cost of one large doll house (rounded to nearest dollar)? MC DL + DM + MOH 30 $80 40 +75 a b. $70 c. $68 d. $170 $135 3. Under an Activity Based Costing System, what is the cost of one large doll house (rounded to nearest dollar)? a. $38 b. $187 $ $135 C. $110 e. $67 4) Pomodoro Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Big T. Small T. Total 1000 Sales $15.950 $13,050 Variable expenses $3,100 $2,120 MC 12850 10930 23 280 CM%= 82% The fixed expenses of the entire company were $20,049. The sales mix of Big T. and Small T. at the break-even point for the Pomodoro Inc. is (rounded): - 200 Big T. $12,850 & Small T. $10,930 FC 20049 20049 Ble & b. Big T. $12,650 & Small T. $10,260 CM Z C. Big T. $13,448 & Small T. $11,002 d. Big T. $13,126 & Small T. $11,324 e. None of the above check 5. Average Corporation has a margin of safety percentage of 60% based on its actual sales. The break- even point is $500,000 and the variable expenses are 60% of sales. Given this information, the actual profit is: FC $300,000 BEPO- MS = Total sales - B E sales 60% : Sales - 500000 b. $520,000 501000 FC: c. $250,000 d. $410,500 e. None of the above (6) The Repeat Company uses predetermined overhead rates to apply manufacturing overhead to lobe The predetermined overhead rate is based on machine hours in Dept. Machining and direct labor hours in Dept. Craft. At the beginning of the year, the company made the following estimates: Dept. Machining Dept. Craft Manufacturing Overhead $80,000 $60,000 Direct labor hours 8,000 10,000 Machine hours 10,000 2,000 POHR They recently received an order for a job from a company in Texas. The expected cost of this job is: Dept. Machining Dept. Craft Direct labor hours 300 800 Machine hours 500 What is the estimated overhead cost for this job? a. $11,540 b. $6,400 c. $7,100 d. $8,800 e. None of the above 573 600 30% (7. Total Company produces and sells a single product. The company would like to budget its net operating income (NOI) for the coming year assuming an increase in unit sales but with price, variable cost per unit, and total fixed cost remaining the same. For the past year, the company reported the following results: Sales $478,000 Margin of Safety $228,000 Fixed cost $201,600 If the company expects a 20% increase in unit sales, its NOI for the coming period would be closest to: a. $242,550 b. $260,951 c. $230,400 d. $48,401 e. $372,225 A company's total overhead cost at various levels of activity is presented below: Month March ....... April.... Machine-Hours 2,000 5,000 5.000 4,000 Total Overhead Cost $18,000 $28,500 $32,000 $25,000 May - June ... Assume that the overhead cost above consists of utilities, supervisory salaries, and maintenance. The breakdown of these costs at the 6,000 machine-hour level of activity is as follows: $12,000 Utilities (variable)...... Supervisory salaries (fixed) Maintenance (mixed). Total overhead cost... 12,000 Suppose the company uses the high-low method to estimate a cost formula for maintenance. What is the total maintenance cost the company expects to incur at an activity level of 7.000 machine hours? a. $13,500 b. $12,000 c. $12,500 d. $13,700 e. None of the above NOT - 30 sales sales = x VE 60 sales x cm . 40 sales 10 Calculator Corporation sells a product for $10 per unit. The fixed expenses are $420,000 per month and the unit variable expenses are 60% of the selling price. What sales would be necessary in order for Calculator Corp. to realize a profit of 30% of sales? a. $2,700,000 SP=10 NEU = 6 b. $1,845,000 CMU 4 C. $2,500,000 TP d. $4,200,000 cm e. None of the above 30X420 DOO 40x 40x30x420000 X -4,200,000 17. Tomato Corp. uses the weighted average method in its process costing system. In their first processing department, the company worked on 60,000 equivalent units of production with respect to conversion costs in June. Additional information for June is: 45% complete Beginning inventory Started Completed and transferred out 10,000 80,000 units 40,000 units The % of completion of the ending inventory in work-in-process with respect to conversion cost is: wil 100% 80% 10.000 80000 40000 d. 40% 22% None of the above e. 18 NoNonsense, Inc., manufactures and sells two products Product AAA and Product B88. The company uses a traditional costing system that allocates overhead based on direct labor hours. Data concerning the expected production of each product appear below: Expected Direct Labor-Hours Per Total Direct Labor Production Hours Product AAA 700 60 4,200 Product BBB 400 1.600 Total direct labor-hours 5,800 Unit 30100 The direct laborate is $20.50 per DLH Direct Materials Cost per Unit Product AAA $105.40 Product BBB $181.30 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Overhead Cost Product AAA Product BBB Activity Cost Pools Activity Measures Total Labor-related DLHS 4,200 1,600 5,800 $109,794 43,680 Production orders Orders 400 700 5,100 10,000 General factory MHS 4,900 741,900 $895,374 Which of the following statements concerning the unit product cost of Product AAA is true? (Choose the closest answer.) a. The unit product cost of Product AAA under traditional costing is less than its unit product cost under activity-based costing by $266.57. b. The unit product cost of Product AAA under traditional costing is greater than its unit product cost under activity-based costing by $266.57. C. The unit product cost of Product AAA under traditional costing is less than its unit product cost under activity-based costing by $308.74 d. The unit product cost of Product AAA under traditional costing is greater than its unit product cost under activity-based costing by $308.74 e. None of the above 19. Bridge Corporation reported the following data for the month of August Inventories: Raw materials (Direct and Indirect) Beginning Ending Work in process $24,000 $40,000 $23,000 $17,000 Finished goods $50,000 $72,000 Additional information: Raw materials purchases $63,000 Direct labor cost $80,000 Manufacturing overhead cost incurred $46,000 Raw materials included in manufacturing overhead cost incurred as indirect materials $5,000 Manufacturing overhead cost applied to Work in Process $50,000 The adjusted cost of goods sold that appears on the income statement for August is: $187,000 WIP HOH $192,000 $184,000 4 bod 50,000 so loveral $198,000 4000 e. None of the above COGS BBFG ESO 000 TOCM TEAC 20. Small Company's info: 800 000 Sales: 8 000 units Price per unit: $10 Sales: 80000 VC= 24000 CM 56000 Variable Costs: 30% of sales Degree of Operating Leverage: 4 The company is considering the purchase of a new machine that would replace the portion of the direct labor cost. This new machine would increase company's fixed expenses by Sox but will reduce variable expenses per unit of product to 20% of the product's sales price. Determine the indifferent point in sales revenue at which the company will earn the same profit under both the old scenario (without the machine) and the new scenario (with the machine). TE 50'). a. $3,890,000 VE 100%, b. $1,450,000 DODL= CM DOLL NOT c. $2,100,000 d. $1,860,000 e. None of the above Tried al auswers 21. The following data are for the month of July for the Company Planning static Budget Actual Results Sales (in units) 10,000 12,000 Selling Price per unit $85 $86 Variable Cost per unit $61 $62 $133,000 Total Fixed Costs $135,000 static Budget 850 000 What is the company's flexible budget net operating income? Actual Flexible a) $167.000 Sals 10.32000 120000 b) $165,000 C) $155,000 VC 744 732 a) $153,000 e) $171,000 FC 133 133 22. A company distributes a product that sells for $60 per unit. Variable expenses are $40 per unit, and fixed expenses total $100,000 annually. Assume that the company sold 10,000 units last year. The president wants to increase the sales commission by $5 per unit. She thinks that this move, combined with some increase in advertising, would double annual unit sales. By how much could advertising be increased with profits remaining unchanged? Sales 600ooo 120000 450000 a. $140,000 50000 200000 b. $220,000 $100,000 100000 $280,000 4ooooo UE cm 100 000 DO 000 e. None of the above 23. Extra Top Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials: $300,000 Purchases of raw materials Direct labor Manufacturing overhead applied to work in process $285.000 Actual manufacturing overhead cost $260,000 $ 30 Total manufacturing costs $670,000 = OLADM+ MOH Unadjusted CGS $600,000 Inventory balances at the beginning and end of the year were as follows: Beginning Ending Raw materials $40,000 Work in process $42,000 Finished goods $50,000 22001 The company's underapplied or overapplied overhead is closed proportionally to WIP, FG, and CGS accounts. Applied OH in WIP is $28,500, in FG $57,000, and in CGS $199,500. Required: 10% 20% 20% $10,000 67. $35,000 207. 500 000 1471 18.500 122000 What is the adjusted ending balance of the Finished Goods account? 2. $132,000 RM wil (b) $122.000 9 $114,500 8.40* Used d. $116,500 500 330DL 77 e. None of the above COGS looks 1550 DLS 02 BSO OH39 2/60015 ( C 5 HON EB 127 te 35 - MOH Acul 0603 215k Applicat 95795k Overapplied 25. A large retailer of cowboy boots assembled the information shown below for the quarter ended March 31: Total sales revenue $150,000 Selling price per pair of boots $375 Variable selling expense per pair of boots $50 Variable administrative expense per pair of boots $10 Total fixed selling expense $20,000 Total fixed administrative expense $20,000 Beginning merchandise inventory $30,000 Ending merchandise inventory $40,000 Merchandise purchases $100,000 crits 150000 What was the contribution margin for each pair of boots sold during the quarter? 2. $240 b. $315 400 wits c. $90 d. $180 150000 e. None of the above VC 20000 can Sales VE VAE 4000 SD 375 60 UE CM 315

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