1) the controller of hallowell company estimates the amount of materials handling
overhead cost that should be allocated to the company’s two products using the data that
are given below:
the total materials handling cost for the year is expected to be $18,257.40.
if the materials handling cost is allocated on the basis of material moves, how much of
the total materials handling cost would be allocated to the specialty windows? (round
off your answer to the nearest whole dollar.)
a.$9,129
b.$6,639
c.$14,296
d.$15,649
2) gallager company, which has only one product, has provided the following data
concerning its most recent month of operations:
the total gross margin for the month under the absorption costing approach is:
a.$303,600
b.$132,000
c.$19,800
d.$148,600
3) ocon corporation has two operating divisions-an inland division and a coast division.
the company’s customer service department provides services to both divisions. the
variable costs of the customer service department are budgeted at $28 per order. the
customer service department’s fixed costs are budgeted at $372,300 for the year. the
fixed costs of the customer service department are determined based on the peak period
orders.
at the end of the year, actual customer service department variable costs totaled
$212,284 and fixed costs totaled $381,740. the inland division had a total of 1,710
orders and the coast division had a total of 5,560 orders for the year.
required:
a. prepare a report showing how much of the customer service department’s costs
should be charged to each of the operating divisions at the end of the year.
b. how much of the actual customer service department costs should not be charged to
the operating divisions at the end of the year? who should be held responsible for these
uncharged costs?
4) pardise company plans the following beginning and ending inventory levels (in
units) for july:
two units of raw material are needed to produce each unit of finished product.
if pardise company plans to sell 480,000 units during july, the number of units it would
have to manufacture during july would be:
a.440,000 units
b.480,000 units
c.510,000 units
d.450,000 units
5) eschbach company is a wholesale distributor that uses activity-based costing for all
of its overhead costs. the company has provided the following data concerning its
annual overhead costs and its activity based costing system:
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:
to the nearest whole dollar, how much wages and salaries cost would be allocated to a
customer who made 6 orders in a year?
a.$2,739
b.$3,287
c.$4,382
d.$2,191
6) the clerical activity associated with processing purchase orders to produce an order
for a standard product is an example of a:
a.unit-level activity
b.batch-level activity
c.product-level activity
d.organization-sustaining activity
7) eccles corporation uses a job-order costing system and applies overhead to jobs using
a predetermined overhead rate. during the year the company’s finished goods inventory
account was debited for $384,000 and credited for $325,900. the ending balance in the
finished goods inventory account was $72,100. at the end of the year, manufacturing
overhead was underapplied by $5,400.
the direct labor cost was:
a.$8,000
b.$12,100
c.$17,200
d.$11,600
8) tomczak corporation has provided the following data from its activity-based costing
accounting system:
distribution of resource consumption across activity cost pools:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
required:
a. determine the total amount of supervisory wages and factory utilities costs that would
be allocated to the unit processing activity cost pool. show your work!
b. determine the total amount of supervisory wages and factory utilities costs that would
not be assigned to products. show your work!
9) (ignore income taxes in this problem.) the becker company is interested in buying a
piece of equipment that it needs. the following data have been assembled concerning
this equipment:
this equipment is expected to have a useful life of 6 years. at the end of the sixth year
the working capital would be released for use elsewhere. the company’s discount rate is
10%.
the present value of the net cash flows (all cash inflows less all cash outflows)
occurring during year 6 is closest to:
a.$270,000
b.$195,900
c.$107,200
d.$152,300
10) (ignore income taxes in this problem.) stern corporation is considering the purchase
of a machine that would cost $270,000 and would last for 9 years. at the end of 9 years,
the machine would have a salvage value of $38,000. by reducing labor and other
operating costs, the machine would provide annual cost savings of $54,000. the
company requires a minimum pretax return of 16% on all investment projects.
the net present value of the proposed project is closest to:
a.$16,778
b.-$11,228
c.-$21,222
d.-$42,700