Question

38.

A financial analyst for Simon Manufacturing prepared the following​ report:

Customers	Customer− Level Operating Income	Customer Revenue
A	​$5,041.00	​$26,250
B	​$4,202.00	​$30,000
C	​$3,368.00	​$15,000
D	​$1,069.50	​$7,300
E	​$984.80	​$5,100
F	​$844.80	​$4,400
G	​$336.60	​$1,800
H	​$252.00	​$4,500
I	​($168.00)	​$2,400
J	​($676.00)	​$2,600

What is the cumulative

customer−level

operating income as a percentage of customer level operating income for the top 4 most profitable​ (operating income)​customers?

A.

​17.4%

B.

​79.1%

C.

​85.0%

D.

​89.7%

40.

For​ February, the cost components of a picture frame include

$0.39

for the​ glass,

$0.73

for the wooden​ frame, and

$0.95

for assembly. The assembly desk and tools cost

$610.

Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these​ costs?

A.y​ =

610

​+

2.07X

B.y​ =

2.07

​+

610X

C.y​ =

1.12

​+

610X

D.y​ =

610

​+

1.12X

42.

Bismite Corporation purchases trees from Cheney lumber and processes them up to the

split−off

point where two products​ (paper and pencil​ casings) emerge from the process. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of​ October:

Trees processed​:	260 trees
Production​:	paper	180,000 sheets
	pencil casings	180,000
Sales​:	paper	169,000 at $0.20 per page
	pencil casings	176,000 at $0.24 per casing

The cost of purchasing

260

trees and processing them up to the

split−off

point to yield

180,000

sheets of paper and

180,000

pencil casings is

$13,000.

​Bismite's accounting department reported no beginning inventory.

What are the​ paper's and the​ pencil's approximate weighted cost proportions using the sales value at

split−off

​method, respectively?

A.

50​%

and

50​%

B.

45.45​%

and

54.55​%

C.

48.99​%

and

51.01​%

D.

44.45​%

and

55.55​%

43.

Hanung Corp has two service​ departments, Maintenance and Personnel. Maintenance Department costs of

$320,000

are allocated on the basis of budgeted

maintenance−hours.

Personnel Department costs of

$140,000

are allocated based on the number of employees. The costs of operating departments A and B are

$184,000

and

$276,000​,

respectively. Data on budgeted

maintenance−hours

and number of employees are as​ follows:

                                                                                                                   

	Support Departments		Production Departments
	Maintenance Department	Personnel Department	A	B
Budgeted costs	$320,000	$140,000	$184,000	$276,000
Budgeted maintenance−hours	NA	900	1,290	670
Number of employees	55	NA	240	650

Using the

step−down

​method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated​ first? (Do not round any intermediary​ calculations.)

A.

$121,102

B.

$144,336

C.

$63,147

D.

$210,612

44.

Bismite Corporation purchases trees from Cheney lumber and processes them up to the

split−off

point where two products​ (paper and pencil​ casings) emerge from the process. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of​ October:

Trees processed​:	260 trees
Production​:	paper	160,000 sheets
	pencil casings	160,000
Sales​:	paper	155,000 at $0.20 per page
	pencil casings	156,500 at $0.25 per casing

The cost of purchasing

260

trees and processing them up to the

split−off

point to yield

160,000

sheets of paper and

160,000

pencil casings is

$15,500.

​Bismite's accounting department reported no beginning inventory.

If the sales value at

split−off

method is​ used, what is the approximate production cost for each pencil ​casing? (Round intermediary percentages to the nearest​hundredth.)

A.

$0.044

B.

$0.054

C.

$0.056

D.

$0.043

45.

Alfred, owner of

Hi−Tech

Fiberglass​ Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for​analysis:

Budgeted manufacturing overhead costs​:
Plant Maintenance PM​ (Support Dept)	$330,000
Data Processing DP​ (Support Dept)	$70,000
Machining M​ (Operating Dept)	$200,000
Capping C​ (Operating Dept)	$145,000
Services furnished​:
By Plant Maintenance​ (budgeted labor−​hours):
to Data Processing	3,100
to Machining	5,600
to Capping	8,700
By Data Processing​ (budgeted computer​ time):
to Plant Maintenance	950
to Machining	3,500
to Capping	850

Which of the following linear equations represents the complete reciprocated cost of the Data Processing​ Department?

A.​DP=

$330,000

​+

​(950

​/

17,400​)

DP

B.​DP=

$70,000

​+

​(3,100​/

17,400​)

PM

C.​DP=

$70,000

×

​(950

​/

5,300​)

​+

$330,000

×

​(3,100

​/

17,400​)

D.​DP=

$70,000

​+

​(950

​/

5,300​)

PM

Answer 1

Question: 38

What is the cumulative customer−level operating income as a percentage of customer level operating income for the top 4 most profitable​ (operating income)​customers?

Answer:

Customers	Customer− Level Operating Income	Cumulative Customer− Level Operating Income
A	​$5,041.00	​$5,041.00
B	​$4,202.00	$9,243.00
C	​$3,368.00	$12,611.00
D	​$1,069.50	$13,680.50
E	​$984.80	$14,665.30
F	​$844.80	$15,510.10
G	​$336.60	$15,846.70
H	​$252.00	$16,098.70
I	​($168.00)	$15,930.70
J	​($676.00)	$15,254.70

• Cumulative customer−level operating income as a percentage of customer level operating income for the top 4 most profitable customers = ($13,680.50/$15,254.70)*100 = 89.7%
• Option (D) is the correct answer.

Question: 40

Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these​ costs?

Answer:

Given that, the cost components of a picture frame include:

• $0.39 for the​ glass,
• $0.73 for the wooden​ frame, and
• $0.95 for assembly.
• The assembly desk and tools cost $610.

Add the components = $0.39+$0.73+$0.95 = $2.07

The cost function is y = a+bx

y = total cost;

a = total fixed cost;

b = variable cost;

x = units that are produced or sold.

The cost function is y = 610 + 2.07X

• Option (A) is the correct answer.

Question: 42

What are the​ paper's and the​ pencil's approximate weighted cost proportions using the sales value at split−off ​method, respectively?

Answer:

Given that,

The cost of purchasing 260trees and processing them up to the split−off point to yield 180,000 sheets of paper and 180,000 pencil casings and

Paper = $0.20

Pencil casings = $0.24

So, Paper = 180,000 *  $0.20 = $ 36,000

Pencil casings = 180,000 * $0.24 = $ 43,200

Total = $ 36,000 + $ 43,200 = $ 79,200

weighted cost proportions of paper =  ($ 36,000/$ 79,200)*100 = 45.45%

weighted cost proportions of Pencil casings=  ($ 43,200/$ 79,200)*100 = 54.545% = 54.55%

• Option (B) is the correct answer.

Question: 43

Using the step−down method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated​ first?

Answer:

Given that,

Maintenance hours are 900 for Personnel Department, 1,290 for production department A and 670 for production department B.

Total Maintenance hours = 900 + 1,290 + 670 = 2,860

Maintenance department cost = $320,000

Department A maintenance hours = 1,290

Maintenance Department cost allocated to Department A =  $320,000* 1,290/ 2,860 = $ 1,44,336

• Option (B) is the correct answer.

Question: 44

If the sales value at split−off method is​ used, what is the approximate production cost for each pencil ​casing?

Answer:

Given that ,

The cost of purchasing 260 trees and processing them up to the split−off point to yield 160,000 sheets of paper and

160,000 pencil casings.

Paper = $0.20

Pencil casings = $0.25

So, Paper = 160,000 *  $0.20 = $ 32,000

Pencil casings = 160,000 * $0.25 = $ 40,000

Total = $ 32,000 + $ 40,000 = $ 72,000

weighted cost proportions of Pencil casings=  ($ 40,000/$ 72,000) = 0.56

• Option (C) is the correct answer.

Question: 45

Which of the following linear equations represents the complete reciprocated cost of the Data Processing​ Department?

Answer:

Given that,

Data Processing DP​ (Support Dept) = $70,000

By Plant Maintenance​ (budgeted labor−​hours):3,100

Total of Plant Maintenance​ = 17,400

The linear equation is DP=$70,000​+​(3,100​/17,400​)PM

• Option (B) is the correct answer.