Project #47039 - homework1

Question 1 (1 point)

 

Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Motorcade's allocation of service department costs:

 

 

 

Budgeted Costs

Nbr of Employees

 

 

S1

$3,360,000

75

 

 

S2

2,200,000

50

 

 

S3

1,000,000

25

 

 

P1

 

150

 

 

P2

 

225

 

 

Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs.

Calculate the total service department cost allocated to each production department P1. 

 

 

 

Calculate the total service department cost allocated to production department P1

Your Answer:

 

Question 2 (1 point)

El Dorado Company has two production plants. Recently, the company conducted an ABM study to determine the cost of activities involved in processing orders for parts at each of the plants. How might an operations manager use this information to manage the cost of processing orders?

Question 2 options:

 

Set up an ABC costing system

 

Identify benchmarks

 

Compare the cost to process an order at each plant and the nature of the orders to determine if costs are out of control. If out of control, investigate

 

Close down the plant with the highest cost to increase profits

 

Question 3 (1 point)

 

Infinity Designs, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Home and Garden Expo. The exhibit will cost the company $12,000 for space. At the show, Infinity Designs will present a slide show on a PC, pass out brochures that are printed previously, (the company printed more than needed), and show its portfolio of previous jobs.

 

 

 

 

 

 

 
                   

 

                 

The company estimates that revenue will increase by $36,000 over the next year as a result of the exhibit. For the previous year, profit was as follows:

 

 

                 

 

                 
                     

 

 

 

 

Revenue

 

$201,000

 

 

Less:

 

 

 

 

Design supplies (variable cost)

$16,500

 

 

 

Salary of Samantha Spade (owner)

80,000

 

 

 

Salary of Kim Bridesdale (full time employee)

55,000

 

 

 

Rent

18,000

 

 

 

Utilities

6,000

 

 

 

Depreciation of office equipment

3,600

 

 

 

Printing of advertising materials

700

 

 

 

Advertising in Middleton Journal

2,500

 

 

 

Travel expenses other than depreciation of autos (variable cost)

$2,000

 

 

 

Depreciation of company cars

9,000

 

 

 

 

 

 

 

Required:

Calculate the impact of the exhibit on company profit. 

Your Answer:

 

Question 4 (1 point)

Each year, Sunshine Motos surveys 7,500 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to Global Associates, who have offered to conduct the survey and summarize results for $30,900.Craig Sunshine, the president of Sunshine Motors, believes that Global will do a higher-quality job than his company has been doing, but is unwilling to spend more than $10,000 above the current costs. The head of bookkeeping for Sunshine has prepared the following summary of costs related to the survey in the prior year.

Mailing   $16,200                                                                     

Printing (done by Lester Print Shop)   $4,500

Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned
       (100 hours X $15)  $1,500

Share of depreciation of computer and software used to track survey responses and summarized results.   $1,100

Share of electricity/phone/etc. based on square feet of space occupied by Pat Fisher vs. entire company.  $500

REQUIRED: What is the incremental cost of going outside versus conducting the survey as in the past?

Your Answer:

Question 5 (1 point)

 

Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below:

 

 

Cost per Unit

Variable costs

 

Direct material

$920

Direct labor

600

Variable overhead

300

 

 

 

 

Fixed costs

 

Depreciation of equipment

500

Depreciation of building

300

Supervisory salaries

300

 

 

 

 

The company has an offer from Duvall Valves to produce the part for $2,000 per unit and supply 1,000 valves (the number needed in the coming year). If the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,000 per year.

What is the incremental savings of buying the valves?

Your Answer:

 

Question 6 (1 point)

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,500 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.89 per pound.  Allocate the joint costs using relative weight. With these costs, what is the profit or loss associated with Copper?

Your Answer:

Question 7 (1 point)

 

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,500 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.85 per pound.  Allocate the joint costs using the relative sales values. With these costs, what is the profit or loss associated with Copper?

 

 

http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

Your Answer:

Question 8 (1 point)

 

Common costs

Question 8 options:

 

A) are fixed costs that are not directly traceable to an individual product line

 

B) normally not avoidable

 

both A and B are true statements

 

Neither A nor B is a true statement

 

 

Subject Mathematics
Due By (Pacific Time) 11/14/2014 12:00 pm
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