This homework assignment is worth 25 points that will be awarded based on the following:

 Points QUESTIONS 1–7, 9–11, 14, 16–19 1 point each 15 QUESTIONS 8, 12, 13, 15, 20 2 points each 10 TOTAL 25

1. (1 point) Aesop Douglas plans on selling autographed souvenir rugs at the Olympics. Based on similar events, he has the following projected figures:

 Selling price per rug \$170.00 Contribution margin per rug \$60.00 Total fixed costs \$125,500

What selling price per rug would be needed to obtain a before-tax profit of \$189,500 at a volume of 3,500 rugs?

a. \$ 90.00

b. \$110.00

c. \$150.00

d. \$170.00

e. \$200.00

f. \$230.00

g. \$260.00

h. None of the above.

2. (1 point) The following information pertains to Butter, Inc. for the month of June:

Beginning work-in-process inventory \$ 110,000

Ending work-in-process inventory \$ 80,000

Cost of goods manufactured \$ 350,000

If prime costs are 75% of conversion costs, what was the direct labor cost incurred for June? a.\$112,500

b. \$200,000

c. \$90,000

d. \$30,000

e. \$20,000

f. \$127,500

g. \$150,000

h. None of the above

3. (1 point) Abbagnale Enterprises will ship all of the USA athletes’ gear to Russia for the Olympics. The company has the following historical information based on similar trips taken overseas:

Trip Nautical Miles Operating Costs

1 500,000 \$356,000

2 580,000 \$380,000

3 660,000 \$420,000

What is the best estimate of total operating costs using the high-low method if the expected mileage for the trip to Russia is 590,000 miles?

a. \$236,000

b. \$375,455

c. \$386,552

d. \$386,441

e. \$392,000

f. \$391,977

g. \$420,080

h. None of the above

4. (1 point) Jones Manufacturing reports that finished goods inventory was \$14,000 on April 1 and \$16,500 on April 30. Beginning and ending work-in-process inventories were \$12,000 and \$24,000, respectively. If cost of goods sold for the month of April was \$80,000, what was the cost of goods manufactured during April?

a. \$82,500

b. \$49,500

c. \$68,500

d. \$77,500

e. \$110,500

f. \$92,000

g. \$96,500

h. None of the above

5. (1 point) Cash Company has a predetermined overhead rate of \$4 per machine hour. Last year the company incurred \$112,400 of actual manufacturing overhead cost and the account was \$4,200 over-applied. How many machine hours were used during the year?

a. 16,800 machine hours

b. 20,000 machine hours

c. 28,100 machine hours

d. 30,200 machine hours

e. 27,050 machine hours

f. 29,150 machine hours

g. 28,250 machine hours

h. None of the above.

6. (1 point) The Adams Corporation has the following data for 2014:

Units sold 10,000 units

Total fixed costs \$48,000

Selling price per unit \$20

Variable cost per unit \$12

The margin of safety in units (round to the nearest whole unit) and operating leverage are, respectively:

a. 2,000 units; 2.5.

b. 2,000 units; 1.67.

c. 4,000 units; 2.5.

d. 4,000 units; 1.67.

e. 6,000 units; 2.5.

f. 6,000 units; 1.67

g. 0 units; 1.67

h. None of the above.

# Use the following information to answer questions the next two questions:

Nicoll, Inc., completed the following jobs during 2014:

 Job 10 Job 20 Direct materials \$350 \$1,200 Direct labor \$345 \$1,350 Units completed 100 360 Direct labor hours 30 80 Number of setups 7 3 Number of orders 7 4 Machine hours 60 32 Kilowatt hours 125 150

At the beginning of 2014, the company identified the following overhead costs and activity drivers:

 Expected Expected Expected Expected Overhead Activity Cost Activity Driver Quantity Setups \$120,000 Number of setups 400 Ordering \$ 70,000 Number of orders 250 Maintenance \$180,000 Machine hours 3,000 Power \$ 30,000 Kilowatt hours 75,000

The company’s normal activity is 5,000 direct labor hours.

7. (1 point) If Nicoll, Inc. uses direct labor hours in a traditional costing system to assign overhead, what is the total cost of Job 10?

a. \$2,400

b. \$8,950

c. \$2,550

d. \$6,550

e. \$3,095

f. \$8,405

g. \$5,495

h. None of the above

8. (2 points) If Nicoll, Inc. uses an activity-based costing system to assign overhead, what is the total cost of Job 20?

a. \$3,095

b. \$4,950

c. \$5,110

d. \$5,650

e. \$8,405

f. \$8,950

g. \$6,550

h. None of the above

9. (1 point) The work-in-process of Parrott Corporation increased \$11,500 from the beginning to the end of November. Costs incurred during November included \$12,000 for direct materials, \$63,000 for direct labor, and \$21,000 for overhead. What was the cost of goods manufactured during November?

a. \$11,500

b. \$84,500

c. \$74,500

d. \$75,000

e. \$107,500

f. \$95,500

g. \$96,000

h. None of the above

10. (1 point) Information from the records of Place, Inc., for the month of December is as follows:

 Sales \$962,000 Direct materials purchases \$188,000 Direct labor \$280,000 Direct materials, December 1 \$ 25,000 Work in process, December 1 \$ 37,000 Finished goods, December 1 \$120,000 Direct materials, December 31 \$ 11,000 Work in process, December 31 \$ 85,000 Finished goods, December 31 \$ 55,000 Factory overhead \$290,000 Selling and administrative expenses \$170,000

The operating income (loss) for the month of December is

a. \$(148,000)

b. \$(117,000)

c. \$3,000

d. \$20,000

e. \$34,000

f. \$68,000

g. \$173,000

h. None of the above

# Use the following information to answer the next two questions:

Fred’s Frozen Creations has been contracted to train the USA’s synchronized ice sculpting team. They have identified two different independent variables (ice sculpting hours and number of ice blocks used in training) in two different equations to evaluate the cost of training. The results of the two regressions are as follows:

# SUMMARY OUTPUT – Sculpting hours

Regression Statistics

 Multiple R 0.6986 R Square 0.4532 Adjusted R Square 0.3143 Standard Error \$40,587 Observations 24

 Coefficients Standard Error t Stat P-value Intercept \$1,214.35 \$398.12 3.05 0.0254 Sculpting hours \$21.90 \$7.71 2.84 0.1200

# SUMMARY OUTPUT – Number of ice blocks

Regression Statistics

 Multiple R 0.6145 R Square 0.3320 Adjusted R Square 0.2874 Standard Error \$43,127 Observations 24

 Coefficients Standard Error t Stat P-value Intercept \$6,764.58 \$2,073.09 3.26 0.0125 Number of blocks \$223.48 \$69.83 3.20 0.0240

11. (1 point) Using the best cost driver, what is the estimated total cost of training these athletes if 12,300 sculpting hours are incurred and Fred’s uses 1,190 ice blocks during training? Assume these estimates are within the relevant range.

a. \$27,275.35

b. \$96,047.35

c. \$272,705.78

d. \$296,645.35

e. \$270,584.35

f. \$303,409.73

g. \$309,957.00

h. None of the above

12. (2 points) Assume Fred’s Frozen Creations chooses to use the number of ice blocks to estimate the cost of training. Construct a 90% confidence interval for the cost of training when the number of ice blocks used is estimated at 1,300. Assume 1,300 ice blocks is within the relevant range. (Round all calculations to the nearest dollar)

a. (\$223,240, \$371,338)

b. (\$211,035, \$383,543)

c. (\$227,601, \$366,977)

d. (\$196,535, \$344,633)

e. (\$207,844, \$386,734)

f. (\$189,817, \$404,761)

g. (\$223,499, \$371,079)

h. None of the above.

13. (2 point) Eden Company manufactures two products, Brights and Dulls, from a joint process. The cost of the joint process is \$50,000 and results in 250 units of Brights and 1,000 units of

Dulls. Both products must be processed past the split-off point, incurring separable costs for

Brights of \$60 per unit and \$40 per unit for Dulls. The market price is \$250 for Brights and \$200 for Dulls. What is the amount of joint costs allocated to Brights using the net realizable value method?

a. \$10,000

b. \$11,446

c. \$25,000

d. \$27,143

e. \$27,778

f. \$30,000

g. \$50,000

h. None of the above

# Use the following information to answer the next two questions:

Jay Manufacturing Company has two support departments, Maintenance and Personnel, and two producing departments, A and B. The Maintenance Department costs of \$40,000 are allocated on the basis of standard service hours used. The Personnel Department costs of \$6,000 are allocated on the basis of number of employees. The direct overhead costs of Departments A and B are \$8,000 and \$20,000, respectively. The company provided the following data:

 Maint. Person. Dept. Dept. Dept. Dept. A B Standard service hours used 90 100 630 270 Number of employees 120 60 200 200 Direct labor hours 125 125 500 250

14. (1 point) What are the total overhead costs associated with Department B after allocating the Maintenance and Personnel Departments using the direct method? (Hint: You are finding the TOTAL cost in Department B after all allocations).

a. \$31,000

b. \$32,200

c. \$35,000

d. \$36,333

e. \$38,667

f. \$39,000

g. \$41,800

h. None of the above

15. (2 points) What are the total overhead costs associated with Department B after allocating the Maintenance and Personnel Departments using the step (sequential) method? Assume the company allocates the cost of the Maintenance department first. (Hint: You are finding the TOTAL cost in Department B after all allocations).

a. \$32,080

b. \$32,800

c. \$35,000

d. \$38,200

e. \$39,000

f. \$35,800

g. \$41,920

h. None of the above

16. (1 point) If a company’s contribution margin ratio is 0.40, targeted after tax net income is \$28,000 (tax rate of 30%), and targeted sales volume in dollars is \$300,000, then total fixed costs are:

a. \$ 43,333

b. \$ 80,000

c. \$ 92,000

d. \$118,000

e. \$140,000

f. \$152,000

g. \$213,333

h. None of the above

17. (1 point) Eden Company manufactures two products, Brights and Dulls, from a joint process. The cost of the joint process is \$50,000 and results in 250 units of Brights and 1,000 units of

Dulls. Both products must be processed past the split-off point, incurring separable costs for

Brights of \$60 per unit and \$40 per unit for Dulls. The market price is \$250 for Brights and \$200 for Dulls. What is the gross profit for Brights assuming the physical units method is used?

a. \$12,500

b. \$17,500

c. \$18,000

d. \$35,500

e. \$42,500

f. \$47,500

g. \$62,500

h. None of the above

# Use the following information to answer the next two questions:

Holms Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at \$400,000 and 80,000 hours, respectively, for the year. In May, Job #158 was completed at a cost of \$6,000 in direct materials and \$4,000 in direct labor. The labor rate is \$8 per hour. By the end of the year, Holms had worked a total of 75,000 direct labor-hours and had incurred \$365,500 actual manufacturing overhead cost.

18. (1 point) The total cost of Job #158 recorded on the completed job cost sheet would be: a.\$ 8,500

b. \$10,000

c. \$11,600

d. \$12,003

e. \$12,667

f. \$12,500

g. \$14,000

h. None of the above

19. (1 point) Holms’ manufacturing overhead for the year was:

a. \$1,500 under-applied

b. \$1,500 over-applied

c. \$25,000 under-applied

d. \$25,000 over-applied

e. \$9,500 under-applied

f. \$9,500 over-applied

g. \$34,500 under-applied

h. \$34,500 over-applied

i. None of the above

20. (2 points) Tier Inc. sells two products – Small and Large. The company has the following information available:

Small Large Total

Variable cost per unit \$18 \$28

Contribution margin ratio 40% 20%

Total fixed costs \$60,000

Assuming a constant mix of 3 units of Small for 2 units of Large, what is the breakeven point in units? (round all ratios to 4 decimal places)

a. 1,637 units of Small and 1,091 units of Large

b. 3,600 units of Small and 2,400 units of Large

c. 2,667 units of Small and 4,000 units of Large

d. 3,375 units of Small and 2,625 units of Large

e. 3,000 units of Small and 2,000 units of Large

f. 2,400 units of Small and 3,600 units of Large

g. 1,895 units of Small and 1,263 units of Large

h. None of the above