121) Aven Salon charges for their services based on the following:
Direct labor rate $ 90 per hour
Materials markup 40 %
Using time and materials pricing, what is the total price for services requiring 4 direct labor
hours and $150 of materials?
A) $510.
B) $420.
C) $600.
D) $570.
E) $360.
122) Shale Remodeling uses time and materials pricing. It is setting prices for next year using the
following information:
Labor rate, including fringe benefits $ 75 per hour
Annual labor hours 6,350 hours
Annual materials purchase $ 1,206,250
Materials purchasing, handling, and storage $ 241,250
Overhead for depreciation, taxes, insurance, etc. $ 670,000
Target profit margin for both labor and materials 25 %
What should Shale set as the materials markup per dollar of materials used?
A) 25%.
B) 45%.
C) 40%.
D) 20%.
E) 50%.
123) Shale Remodeling uses time and materials pricing. It is setting prices for next year using the
following information:
Labor rate, including fringe benefits $ 75 per hour
Annual labor hours 6,350 hours
Annual materials purchases $ 1,206,250
Materials purchasing, handling, and storage $ 241,250
Overhead for depreciation, taxes, insurance, etc. $ 666,750
Target profit margin for both labor and materials 25 %
What should Shale set as rate per hour of labor hour?
A) $250.
B) $200.
C) $150.
D) $225.
E) $180.
124) Shale Remodeling uses time and materials pricing. It is setting prices for next year using the
following information:
Labor rate, including fringe benefits $ 75 per hour
Annual labor hours 6,350 hours
Annual materials purchases $ 1,206,250
Materials purchasing, handling, and storage $ 241,250
Overhead for depreciation, taxes, insurance, etc. $ 666,750
Target profit margin for both labor and materials 25 %
What is the total price for a project requiring 160 direct labor hours and $150,000 of materials?
A) $184,000.
B) $210,000.
C) $256,000.
D) $225,000.
E) $253,500.
125) Weng CPAs charges for their services based on the following:
Labor rate $ 160 per hour
Materials markup 40 %
Using time and materials pricing, what is the total price for services requiring 8 labor hours and
$50 of materials?
A) $1,350.
B) $1,450.
C) $1,300.
D) $1,330.
E) $1,360.
126) Identify the five steps involved in managerial decision-making.
127) Good management accounting indicates that projects be evaluated using relevant data. In
choosing among alternatives, what factors (considerations) are relevant?
128) A company received a special one-time order to buy 6,000 of its portable radios for $20.
The radios generally sell for $25. Each radio’s total manufacturing cost is $21.50, which
includes $2.50 of allocated fixed overhead. Should the company accept the special order?
129) A company manufactures two products. Each unit of product X requires 10 machine hours
and each unit of product Y requires 4 machine hours. The company’s productive capacity is
limited to 180,000 machine hours. Each unit of product X sells for $15 and has variable costs of
$7. Each unit of product Y sells for $8 and has variable costs of $3. If the company can sell all
that it produces of both products, what should the sales mix be?
130) Goodfellow Company had the following results of operations for the past year:
Sales (8,000 units at $6.80) $ 54,400
Materials and direct labor (20,000)
Overhead (40% variable) (10,000)
Selling and administrative expenses (all fixed) (6,000)
Operating income $ 18,400
A foreign company offers to buy 2,000 units at $5.00 per unit. In addition to variable
manufacturing costs, there would be shipping costs of $1,200 in total on these units. Prepare an
analysis of this additional business to show whether Goodfellow should take this order.
131) Variations Company had the following results of operations for the past year:
Sales (8,000 units at $7 per unit) $ 56,000
Variable manufacturing costs (30,000)
Fixed manufacturing costs (6,000)
Fixed selling and administrative expenses (4,500)
Operating income $ 15,500
A foreign company offers to buy 700 units at $4 per unit. In addition to variable manufacturing
costs, there would be an export cost of $0.30 per unit. Prepare an analysis of this additional
business to show whether Variations should take this order.
132) A company produces three different products that all require processing on the same
machines. The company has only 27,000 machine hours available in each year. Production
information for each product is:
A B C
Sales price per unit $20.00 $38.00 $35.00
Variable costs per unit $12.00 $26.00 $17.00
Machine hours necessary to produce one unit 2.5 4.0 4.50
Required:
(1) Determine the preferred sales mix if there are no market constraints on any of the products.
(2) Determine the preferred sales mix if the demand is limited to 5,000 units for each product.
(3) Determine the preferred sales mix if the demand is limited to 3,000 units for each product.
133) A company puts four products through a common production process. This process costs
$100,000 each year. The four products can be sold when they emerge from this process at the
“split-off point,” or processed further and then sold. Data about the four products for the coming
period are:
Unit Sales Unit Sales
Price per Price per
unit at unit after Additional
Split-Off Further Processing
Product Volume Point Processing Costs
Stroller 20,000 lb. $28.00 $42.00 $400,000
Walker 10,000 lb. 7.00 28.00 144,000
Jogger 5,000 lb. 36.00 58.00 120,000
Runner 5,000 lb. 18.00 22.00 40,000
Determine which products should be sold at the split-off point and which should be processed
further.
134) A company has just received a special, one-time order for 1,000 units. Producing the order
will have no effect on the production and sales of other units. The buyer’s name will be stamped
on each unit, at a cost of $1.50 per unit. Normal cost data, excluding stamping, follows:
Direct materials…………………………… $ 10 per unit
Direct labor……………………………….. 16 per unit
Variable overhead………………………… 4 per unit
Allocated fixed overhead…………………. 12 per unit
Allocated fixed selling expense…………… 8 per unit
Prepare an analysis that indicates the selling price per unit this company will require to earn
$3,000 on the order.