1. Use the following information to answer this question.
Harris Company produces a single product. Last year, Harris manufactured 17,000 units and sold 13,000 units. Production costs for the year were as follows:
Production Cost Data
Direct materials $153,000
Direct labor $110,500
Variable manufacturing overhead $204,000
Fixed manufacturing overhead $255,000
Under absorption costing, the carrying value on the balance sheet of the ending inventory for the year would be
A. $190,800.
B. $170,000.
C. $0.
D. $230,800.
2. Last year, Gransky Corporation's variable costing net operating income was $52,100, and its ending inventory increased by 400 units. Fixed manufacturing overhead cost was $7 per unit. What was the absorption costing net operating income last year?
A. $2,800
B. $52,100
C. $54,900
D. $49,300
3. Use the following information to answer this question.
Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order.
Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, which amount would the company have to charge for the Pyburn wedding cake to just break even?
A. $55.79
B. $29.92
C. $338.64
D. $279.87
4. Use the following information to answer this question.
Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order.
Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall margin on the order?
A. $152.45
B. $165.41
C. $460.30
D. $96.66
5.Rank the following methods of assigning overhead costs from least accurate to most accurate.
A. Plantwide rate, departmental rates, activity-based costing
B. Departmental rates, plantwide rate, activity-based costing
C. Activity-based costing, departmental rates, plantwide rate
D. Plantwide rate, activity-based costing, departmental rates
6. Daniele Corporation uses an activity-based costing system with the following three activity cost pools:
Activity Cost Pool Total Activity
Fabrication 50,000 machine-hours
Order processing 500 orders
Other not applicable
The activity rate for the Fabrication activity cost pool is closest to _______ per machine hour.
A. $1.24
B. $3.72
C. $7.44
D. $4.44
7. Bear Publishing sells a nature guide. The following information was reported for a typical month (sales volume is constant each month):
Total Per Unit
Sales $17,600 $16.00
Variable expenses $9,680 $8.80
Contribution margin $7,920 $7.20
Fixed expenses $3,600
Net operating income $4,320
Bear is expecting a 20-cent increase in variable expenses. No other changes are expected or planned. How much contribution margin should Bear expect after the increase?
A. $7,700
B. $9,900
C. Can't be determined
D. $4,100
8. Use the following information to answer this question.
Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system:
Activity Cost Pools Activity Rate
Size-related $0.94 per guest
Complexity-related $31.62 per tier
Order-related $55.70 per order
• The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake.
• The measure of complexity is the number of tiers in the cake.
• The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.)
• The activity rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. The activity rates don't include the costs of purchased decorations, such as miniature statues and wedding bells, which are accounted for separately.
Data concerning two recent orders are listed here:
Pyburn Wedding Smith Wedding
Number of reception guests 72 189
Number of tiers on the cake 4 5
Cost of purchased decorations for cake $29.92 $68.75
Suppose the company decides that the present activity-based costing system is too complex and that all costs (except for the costs of purchased decorations) should be allocated on the basis of the number of guests. In that event, what would you expect to happen to the costs of cakes?
A. The cost of cakes for receptions with fewer than the average number of guests would go down.
B. The costs of all cakes would go down.
C. The cost of cakes for receptions with more than the average number of guests would go down.
D. The costs of all cakes would go up.
9. Slosh Cleaning Corporation services both residential and commercial customers. Slosh expects the following operating results next year for each type of customer:
Operating Results
Residential Commercial
Sales $60,000 $140,000
Contribution margin ratio 50% 30%
Slosh expects to have $18,000 in fixed expenses next year. What would Slosh's total dollar sales have to be next year to generate a profit of $90,000?
A. $250,000
B. $300,000
C. $216,000
D. $270,000
11. Use the following information to answer this question.
Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the past five months of operations.
Machine Hours Electrical Cost
August 1,000 $1,620
September 900 $1,510
October 1,500 $1,870
November 2,000 $1,950
December 1,300 $1,730
Using the high-low method of analysis, the estimated variable cost per machine hour for electricity is closest to which of the following?
A. $1.68
B. $2.50
C. $0.98
D. $0.40
12. Use the following information to answer this question.
Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the past five months of operations.
Machine Hours Electrical Cost
August 1,000 $1,620
September 900 $1,510
October 1,500 $1,870
November 2,000 $1,950
December 1,300 $1,730
Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to which of the following?
A. $1,306.50
B. $1,290.00
C. $870.00
D. $1,150.00
Murdoch Corporation has provided the following data concerning its only product:
Murdoch Product Data
Selling price $230 per unit
Current sales 39,100 units
Break-even sales 29,716 units
What is the margin of safety in dollars?
A. $5,995,333
B. $8,993,000
C. $6,834,680
D. $2,158,320
Callaham Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit.
Sales volume (units)
4,000 5,000
Cost of sales $338,000 $422,500
Selling and administrative costs $89,600 $106,000
The best estimate of the total monthly fixed cost is
A. $24,000.
B. $427,600.
C. $528,500.
D. $478,050.
Indiana Corporation produces a single product that it sells for $9 per unit.
What was Indiana Corporation's net operating income for the year using variable costing?
A. $371,000
B. $271,000
C. $281,000
D. $181,000
Callaham Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. T
The best estimate of the total variable cost per unit is
A. $106.90.
B. $100.90.
C. $84.50.
D. $105.70.
Answer will be sent by email as attachment.
