Question

1:

WV Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $78,000 annually and one salaried estimator who is paid $44,000 annually. The corporate office has two office administrative assistants who are paid salaries of $48,000 and $36,000 annually. The president's salary is $150,000. How much of these salaries are common fixed expenses?

Multiple Choice

• $84,000

• $234,000

• $150,000

• $298,000

__________________________

2:

Corporation X sold 25,000 units of product last year. The contribution margin per unit was $2, and fixed expenses totaled $40,000 for the year. This year fixed expenses are expected to increase to $45,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same net operating income as was earned last year?

Multiple Choice

• 27,500

• 22,500

• 2,500

• 35,000

_________________________________

3:

A partial listing of costs incurred at Archut Corporation during September appears below:

Direct materials	$ 113,000
Utilities, factory	$ 5,000
Administrative salaries	$ 81,000
Indirect labor	$ 25,000
Sales commissions	$ 48,000
Depreciation of production equipment	$ 20,000
Depreciation of administrative equipment	$ 30,000
Direct labor	$ 129,000
Advertising	$ 135,000

The total of the manufacturing overhead costs listed above for September is:

Multiple Choice

• $30,000

• $50,000

• $292,000

• $586,000

________________________________

4:

At an activity level of 9,500 machine-hours in a month, Falks Corporation’s total variable production engineering cost is $779,950 and its total fixed production engineering cost is $200,970. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 9,900 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

Multiple Choice

• $103.25

• $99.08

• $102.40

• $99.40

_________________________

5:

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$111
Units in beginning inventory	0
Units produced	4,400
Units sold	3,830
Units in ending inventory	570

Variable costs per unit:
Direct materials	$ 25
Direct labor	$ 41
Variable manufacturing overhead	$ 7
Variable selling and administrative expense	$ 5
Fixed costs:
Fixed manufacturing overhead	$46,800
Fixed selling and administrative expense	$ 3,500

The total contribution margin for the month under variable costing is:

Multiple Choice

• $145,540

• $126,390

• $76,090

• $79,590

___________________________

6:

Dake Corporation's relevant range of activity is 2,800 units to 6,000 units. When it produces and sells 4,400 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$ 6.95
Direct labor	$ 3.00
Variable manufacturing overhead	$ 1.70
Fixed manufacturing overhead	$ 2.50
Fixed selling expense	$ 1.00
Fixed administrative expense	$ 0.70
Sales commissions	$ 0.80
Variable administrative expense	$ 0.70

If 3,400 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

Multiple Choice

• $16,780

• $14,280

• $5,780

• $11,000

Answer 1

Answer 1) $234,000 (Office administrative assistants' salaries + President's salary)

Answer 2) 27,500 units

25000 X $2 = $50,000

Less: Fixed expenses

$50,000 - $40,000 = $10,000

Add: new fixed expenses

$10,000 + $45,000 = $55,000

No. of units = $55,000/2 = 27,500 units

Answer 3) $50,000

Manufacturing overhead costs = Factory utilities + Indirect labor + Depreciation of production equipment

= $5,000 + $25,000 + $20,000 = $50,000

Answer 4) $102.40

Variable cost per unit = $779,950/9500 = $82.1

Variable cost for 9900 units= $82.1 X 9900 = $812,790

Add: Fixed cost = $812,790 + $200,970 = $1,013,760

Total cost per unit = $1,013,760/9900 = $102.40

Answer 5) $126,390

Contribution margin = Selling price - Variable expenses = $111 - ($25 + $41 + $7 +$5) = $111 - $78 = $33

Total contribution margin = contribution margin X units sold = $33 X 3,830 = $126,390

Answer 6) $16,780

Total indirect manufacturing cost = (Variable manufacturing overhead X units produced) + Fixed manufacturing overhead = ($1.70 X 3400) + ($2.50 X 4400) = $5,780 + $11,000 = $16,780