USA: +1(669)289-8683 
Sign in
multiple_choice x
MGMT 640 (MGMT 640)-Fall ’12 MGMT 640 Section 1121 Tuesdays – Final exam 2
|
Multiple Choice, Question 8 3 |
Sierra Company allocates the estimated $
2
00,000 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the number of employees using the direct method. Information regarding costs and employees follows:
|
Department |
Employees |
||||
|
Accounting |
4 |
||||
|
Production |
36 |
||||
|
Sales |
1 2 |
How much of the accounting department costs will be allocated to the production and sales departments?
|
|
|
$1 80,000 $ 60,000 |
|
$1, 800,000 $600,000 |
|
$22,222 $66,667 |
|
$1 50 ,000 |
$
50,000 |
|
Multiple Choice, Question 115 |
Velvet Company allocates costs from the payroll department (S1) and the maintenance department (S2) to the molding (P1), finishing (P2), and packaging (P3) departments. Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet which the production department occupies within the factory.
Information about the departments is presented below:
|
Number of |
Number of Square |
||||
|
Costs |
Feet Occupied |
||||
|
Payroll (S1) |
2 |
2,000 |
|||
|
Maintenance (S2) |
$ 2 20,000 |
8 |
64,000 |
||
|
Molding (P1) |
75 |
100,000 |
|||
|
Finishing (P2) |
50 | 60,000 | |||
|
Packaging (P3) |
25 |
40,000 |
Velvet uses the direct method to allocate costs. Round all answers to the nearest dollar.
What amount of the payroll department costs will be allocated to the molding department?
|
$18 5,000 |
|
$132,353 |
|
$70,313 |
|
$75,000 |
|
Multiple Choice, Question 126 Rand Company sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below: |
Cost Pool |
Cost Driver |
$ 200,000 |
Number of orders |
|
Multiple Choice, Question 140 Library Resources Company uses activity-based costing. The company produces soft and hard-cover books. The estimated costs and expected activity for each of the activity pools follow: Activity Estimated Expected Activity
Cost Pool |
Cost |
Total |
|
Multiple Choice, Question 149 |
Biltmore Financial is a banking services company that offers many different types of checking accounts. The bank has recently adopted an activity-based costing system to assign costs to their various types of checking accounts. The following data relate to the money market checking accounts, one of the popular checking accounts, and the ABC cost pools:
Annual number of accounts = 60,000 accounts
Checking account cost pools:
|
Cost Drivers |
||||
|
Returned check costs |
$3,000 ,000 |
Number of returned checks |
||
|
Checking account reconciliation costs |
Number of account reconciliation requests |
|||
|
New account setup |
650,000 |
Number of new accounts |
||
|
Copies of cancelled checks |
400,000 |
Number of cancelled check copy requests |
||
|
Online banking web site maintenance |
195,000 |
Per product group (type of account) |
||
|
Total checking account costs |
$4,305,000 |
Annual activity information related to cost drivers:
|
All Products |
Money Market Checking |
||
| Returned check |
200,000 returned checks |
18,000 |
|
|
Check reconciliation costs |
3,000 checking account |
420 |
|
|
New accounts |
60,000 new accounts |
15,000 |
|
|
Cancelled check copy requests |
100,000 cancelled check |
||
|
Web site costs |
10 types of accounts |
1 |
Calculate the total cost assigned to the money market checking account.
|
$68.50 |
|
$3.26 |
|
$71.75 |
|
$9.21 |
|
Multiple Choice, Question 48 |
Rockwell Company owns a single restaurant which has a cantina primarily used to seat patrons while they wait on their tables. The company is considering eliminating the cantina and adding more dining tables. Segmented contribution income statements are as follows and fixed costs applicable to both segments are allocated on the basis of sales.
|
Restaurant |
Cantina |
||||||
|
$800,000 |
$1,000,000 |
||||||
|
Variable costs |
475,000 |
160,000 |
635,000 |
||||
|
Direct fixed costs |
50,000 |
65,000 |
|||||
|
Allocated fixed costs |
212,500 |
37,500 |
250,000 |
||||
|
Net Income |
$ 62,500 |
($12,500) |
What financial effect will occur to profit if Rockwell eliminates the cantina but no more dining customers are served?
|
Net income will be $50,000. |
|
Net income will increase by $12,500. |
|
Net income will decrease to $37,500. |
|
Net income will decline by $25,000. |
|
Multiple Choice, Question 56 |
Explorer Company manufactures two products, hard-tops and covers for its convertible vehicles. Data for each follows:
|
Hard-top |
Covers |
||
|
Direct labor hours required per unit |
|||
|
Contribution margin per unit |
$240 |
$390 |
Only 4,200 direct labor hours are available per month. How many units of each product should Explorer make in order to maximize profits?
|
0 250 |
|
1,050 0 |
|
1,050 250 |
|
4,200 400 |
|
Multiple Choice, Question 88 Superior Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A product line income statement for the year ended December 31, 2011 follows:
Audio
Video
Accelerators Total Sales $1,045,000
$2,255,000
$2,200,000
$5, 500,000 Less COGS 575,000
1, 240,000
1,870,000
3,685,000 Gross margin 470,000
1,015,000
330,000
1,815,000 Less other var costs 53,000
69,000
| 20,000 |
Multiple Choice, Question 105
Molina Medical Supply Company is trying to decide whether or not to continue distributing hospital supplies. The following information is available for Molina’s business segments. Assume that all direct fixed costs could be avoided if a segment is dropped and that the total common fixed costs would remain unchanged if a segment is dropped.
|
Hospital Supplies |
Retail Stores |
Mail Order |
||
|
$ 120,000 |
$440,000 |
$360,000 |
||
| 200,000 |
140,000 |
|||
|
Contribution Margin |
56,000 |
240,000 | 220,000 | |
|
Direct Fixed Costs |
80,000 |
90,000 |
||
|
Allocated common fixed costs |
70,000 | |||
|
($ 14,000) |
$ 90,000 |
$ 70,000 |
If hospital supplies are dropped, what would happen to profit?
Decrease by $6,000.
Decrease by $114,000.
Increase by $14,000.
Increase by $76,000.
Multiple Choice, Question 106
Molina Medical Supply Company is trying to decide whether or not to continue distributing hospital supplies. The following information is available for Molina’s business segments. Assume that all direct fixed costs could be avoided if a segment is dropped and that the total common fixed costs would remain unchanged if a segment is dropped.
Hospital Supplies
Retail Stores
Mail Order
Sales
$120,000
$440,000
$360,000
Variable costs
64,000
200,000
140,000
Contribution Margin
56,000
240,000
220,000
Direct Fixed Costs
50,000
80,000
90,000
Allocated common fixed costs
20,000
70,000
60,000
Net Income
($ 14,000)
$ 90,000
$ 70,000
Assume that if hospital supplies were dropped, retail store sales would increase by 25%. What would the impact of the increase in retail store sales have on overall profitability?
|
Income will increase by $14,000. |
|
Income will increase by $60,000. |
|
Income would increase by $54,000. |
|
Income will increase by $104,000. |
|
Multiple Choice, Question 46 |
Iguana Company sells a single product. Iguana estimates demand and costs at various activity levels as follows:
|
Units Sold |
Price |
Total Variable Costs |
Fixed Costs |
|
| 120,000 |
$48 |
|||
|
$45 |
$3,500,000 |
|||
|
$40 |
$4,000,000 |
|||
|
180,000 |
$35 |
$4,500,000 |
||
| $30 |
$5,000,000 |
How would you best describe Iguana’s variable cost per unit over the range shown?
|
It is decreasing as volume increases. |
|
It is first increasing as volume increases, then decreasing. |
|
It is constant. |
|
It is increasing as volume increases. |
|
Multiple Choice, Question 55 |
Jackson Company is trying to determine the optimal price to charge for its PUNCH model. Jackson has fixed costs of $50,000 and the PUNCH has variable costs of $12.00 per unit. Jackson has determined that the following relationships exist between price and demand:
|
Demand |
||
| $20 |
6,875 |
|
|
$19 |
8,800 |
|
| $18 | 10,000 | |
|
$17 |
11,000 |
What price should Jackson charge in order to maximize its profit?
|
Multiple Choice, Question 74 |
Costa Company has a capacity of 40,000 units per year and is currently selling 35,000 for $400 each. Barton Company has approached Costa about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Costa $20 per unit when compared to the normal packaging cost. Normally, Costa has a variable cost of $280 per unit. The annual fixed cost of
$2,000,000
would be unaffected by the special order. What would be the impact on profits if Costa were to accept this special order?
|
Profits would decrease $200,000. |
|
Profits would increase $40,000. |
|
Profits would increase $60,000. |
|
Profits would increase $80,000. |
|
Multiple Choice, Question 84 |
The Pure Company uses cost-plus pricing with a 50% mark-up. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $6. In addition, the company incurs $200,000 in fixed costs annually. If demand falls to 80,000 units and the company wants to continue to earn a 50% return, what price should the company charge?
|
$12.75 |
|
$14.55 |
|
$13.50 |
|
$10.95 |
|
Multiple Choice, Question 90 |
A company has $8.00 per unit in variable costs and $4.00 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 60%, what price should be charged if 60,000 units are expected to be sold?
|
$19.20 |
|
$7.20 |
|
$18.13 |
|
$11.33 |
|
Multiple Choice, Question 97 |
The chief engineer at Tech Deals has proposed production of a high-tech portable electronic storage device to be sold at a 30 percent markup above its full cost. Management estimates that the fixed costs per year will be $160,000. The quantity demanded is 40,000 units. How much is the price with a 30 percent markup?
|
$19.60 |
|
$20.80 |
|
$20.00 |
|
More information is needed to answer. |
|
Multiple Choice, Question 109 |
A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $135 per unit. The company requires a profit of 30 percent of selling price. How much is the target cost per unit?
|
$175.50 |
|
$81.00 |
|
$94.50 |
|
$40.50 |
Carlton Products Company has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability. Results appear below:
|
Annual Cost |
Annual Driver Quantity |
|
Processing electronic orders |
500,000 | ||
|
Processing non-electronic orders |
$2,000,000 | ||
|
Picking orders |
Number of different products ordered |
800,000 | |
|
Packaging orders |
$1,500,000 |
Number of items ordered |
50,000,000 |
|
Returns |
Number of returns |
If all costs were assigned to customers based on the number of items ordered, what would be the cost per item ordered?
|
$0.19 |
|
$10.62 |
|
$0.09 |
|
$6.09 |
|
Multiple Choice, Question 123 |
A company using activity based pricing marks up the direct cost of goods by 30% plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $8.00 per order placed; $4.00 per separate item ordered; $30.00 per return. A customer places 10 orders with a total direct cost of $3,000, orders 300 separate items, and makes 5 returns. What will the customer be charged?
| $3,000 |
|
$3,900 |
|
$5,330 |
|
$5,759 |
|
Multiple Choice, Question 127 |
A law firm uses activity-based pricing. The company’s activity pools are as follows:
|
Annual Estimated Cost |
|
Consultation |
Number of consultations |
100 consultations |
|
|
Administrative Costs |
150,000 |
Admin labor hours |
10,000 labor hours |
|
Client Service |
99,000 |
Number of clients |
110 clients |
The firm had two consultations with this client and required 130 administrative labor hours. What additional costs will be charged to this customer?
|
$2,915 |
|
$6,850 |
|
$2,850 |
|
$5,950 |
