*CHOOSE 1 & PLEASE SHOW ALL CALCULATIONS*
1) Glendale Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data:
Costs:
Depreciation$225,000
Utilities 150,000
Wages and Salaries 314,000
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Total$689,000
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Resources are consumed as follows:
Activity Cost Pools
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AssemblySetting Up OtherTotal
Depreciation 30% 20% 50%100%
Utilities 20% 40% 40%100%
Wages and salaries 40% 45% 15%100%
How much total cost would be allocated to the Assembly cost pool?
A)$223,100
2) Koreen Manufacturing Co. has three production departments. Koreen allocates maintenance costs to the departments based on their use of machine hours. The maintenance cost for March was $180,000. The departments usage of labor and machine hours in March were:
DepartmentMachine hoursLabor hours
A 5003,000
B 500 5,000
C 800 2,000
How much maintenance cost should be allocated to the department B for March?
A)$50,000
3) Santa Company has $27 per unit in variable costs and $1,000,000 per year in fixed costs. Demand is estimated to be 100,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?
D)$51.80
4) A General Motors executive is considering how to price the 2013 Chevy Volt electric car in order to maximize profits for the company. Manufacturing each Volt involves $9,500 of materials, $12,500 of labor, $3,800 of shipping, and $4,000 of other supplies. The Detroit facility where the Volt is manufactured has $12.5 million of fixed costs. The marketing department says that adding a Bose sound system would boost demand, but it would cost an additional $750 per unit.
The quantity demanded at each per unit price is as follows:
Quantity / QuantityDemanded / Demanded
Price / (No Bose) / (With Bose)
$29,000 / 14,000 / 16,800
$30,000 / 11,200 / 13,440
$31,000 / 8,960 / 10,752
$32,000 / 7,168 / 8,602
$33,000 / 5,734 / 6,881
$34,000 / 4,588 / 5,505
$35,000 / 3,670 / 4,404
$36,000 / 2,936 / 3,523
$37,000 / 2,349 / 2,819
$38,000 / 1,879 / 2,255
$39,000 / 1,503 / 1,804
$40,000 / 1,203 / 1,443
What profit-maximizing strategy should she choose?
C)$35,000 price with Bose sound system.
5) Sylvia wants to order nine coffee mugs with writing that says “Better to remain silent and be thought a fool than to speak out and remove all doubt.– Abraham Lincoln.” She contacts personalcreations.com to make the mugs. The mugs have the following standard unit cost:
Direct Material = $5.65
Direct Labor = $1.85
Variable Overhead = $3.00
Fixed Overhead = $8.00
Total = $18.50
Personalcreations.com has enough unused capacity to accept the special order without affecting regular sales. What is the minimum price that personalcreations.com should accept for the special order?
B)$10.50 per mug.
6) Troto company has total fixed costs of $6,000,000 and total variable cost of $3,000,000 at a volume level of 300,000 units. What price would be charged if the company used cost plus pricing and a markup of 30%?
C)$39.00
7) The Mermaid Company sells one product with a variable cost of $5 per unit. The company is unsure what price to charge in order to maximize profits. The price charged will also affect the demand. If fixed costs are $100,000 and the following chart represents the demand at various prices, what price should be charged in order to maximize profits?
Units SoldPrice
30,000 $10
40,000$9
50,000$8
60,000$7
B) $9
8) Sanaimanufacturing company produces and sells 40,000 units of a single product. Variable costs total $80,000 and fixed costs total $120,000. If each unit is sold for $8, what markup percentage is the company using?
A)60.0%
9) Tyler’s Consulting Company has purchased a new $15,000 copier. This overhead cost will be shared by the purchasing, accounting, and information technology departments since those are the only departments which will be able to access the machine. The company has decided to allocate the cost based on the number of copies made by each department. The copier is estimated to provide 1 million copies over its life. Each division has estimated the number of copies which will be made over the life of the copier.
Purchasing375,000
Accounting200,000
Information Tech425,000
Note: Cost allocations are computed to 4 significant digits. Resulting values are rounded to the whole dollar. If the purchasing department makes 72,013 copies this year what will be their allocated overhead?
C)$1,080
10) Kandeed Co. sells product K for $30 per unit. Per unit costs of K are as follows:
Direct materials$6
Direct labor 7
Manufacturing overhead12
Total $25
A special order to purchase 10,000 units was recently received. Kandeed has enough capacity to fill the order, and filling the order would not disrupt current production or sales of K. However, Kandeed would incur an additional $3 per unit shipping costs. Half of the manufacturing overhead costs are fixed and would be incurred no matter how many units are produced. In negotiating a price for the special order, what is the minimum acceptable selling price per unit?
A)$22