Consider a producer making choices over two inputs, labour (l) and capital (k) with prices w = 3 and r = 1. The production technology is f(l, k) = l + 3k.

What is the marginal rate of technical substitution (MRTS)? Is there diminishing MRTS?

Find the input demands in long-run (as a function of output level)?

Find the long-run total cost, marginal cost, and average cost functions?

Do the properties of a typical cost function hold for the long run total cost function (show any two properties)?

A firm sells a product in a perfectly competitive market, at a price of $50. The firm has a fixed cost of $30. Fill in the following table and indicate the level of output that maximizes profit. How would the profit-maximizing choice of output change if the fixed cost increased from $40 to $60? More generally, explain how the level of fixed cost affects the choice of output

Question 4 –

Part A -

NT Department of Health rents their facilities to professional health workers for training sessions. Duration of each session is two hours. Anticipated annual volume is 1,000 sessions. The Health Department has invested $2,410,000 in their facility and expects a return on investment (ROI) of 22%. Budgeted costs for the coming year are shown in the table below:

Required:

1. Determine the total cost per training session .

Total cost = Fixed cost +

2. Determine the desired ROI per training session .

Type answer here.

3. Calculate the markup percentage on the total cost per training session (1 mark).

Type answer here.

4. Calculate the target price per training session .

Type answer here.

Part B

In what situation does Department of Health place the greatest focus on its target cost?

How is the target cost determined? What is the basis formula to determine the target selling price in cost-plus pricing?

Greife Corporation's activity-based costing system has three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows:

Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products:

Additional data concerning the company's products appears below:

Required:

a. Calculate activity rates for each activity cost pool using activity-based costing.

b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

c. Determine the product margins for each product using activity-based costing.

M&M Company's inventory on March 1 and the costs charged to Work in Process—Dipping Department during March are as follows:

During March, all direct materials were transferred from the Mixing Department, the units in process at March 1 were completed, and of the 55,000 units entering the department, all were completed except 6,000 units that were 70% completed. Inventories are costed by the first-in, first-out method.

Prepare a cost of production report for March. Round unit cost data to four decimal places and total cost to nearest cent.  You do not need to enter dollar signs ($). Be sure to double-check your answers. A typo will be marked as incorrect.

​

Units to be assigned Cost:

Cost Information:

Costs assigned to Production

Costs Allocated to completed and partially completed units:

Tax Savings and Costing (The Case of Transfer Pricing)

Please prepare a report answering the listed questions. You may Excel to create spreadsheets and copy the answers to this document.

Hansen, Kotter, and Zales is a law firm that contains one service department (Research & Document) and two production departments (Litigation and Consulting). The firm employs a job-order costing system to accumulate costs chargeable to each client. The firm uses actual costing to assign overhead. General overhead costs can be allocated based on either direct attorney hours or the number of employees, depending on managers’ choice. At the end of the year, the records revealed the actual general overhead costs are $720,000. At the end of the year, the records revealed the following costs and operating data for all cases handled during the year:

*** 50% of Research & Department's service is provided to litigation department and the other 50% to consulting department.

Part I Cost Allocation

1. (1.5 point) Compute the overhead allocation rates for general overhead based on different cost drivers. What are the overhead costs assigned to each department, using different cost drivers?

Overhead allocation based on direct attorney hours

                             Research and development |      Litigation      |       Consulting       | Total

Direct attorney hours                     3,000                              8,000                        5,000                 16,000

Percentage of total                        18.75%                           50%                        31.25%

Allocated overhead cost                 $135,000                   $360,000                  $225,000

Overhead allocation based on number of employees

                             Research and development |      Litigation      |       Consulting       | Total

Number of employees                       10                                    8                               6                        24

Percentage of total                        41.67%*                        33.33%                     25%

Allocated overhead cost                 $300,000                   $240,000                  $180,000

*rounded answer but to calculate allocated overhead cost I used (10/24)*720,000 so I would get an exact answer, I just rounded 299,999.999999 to 300,000

2. (1.5 point) Compare the total costs of each production department after departmental cost allocation, using attorney hours and the number of employees as cost driver, respectively. Does the choice of cost driver affect the total costs of each production department?

Overhead cost of production departments using different cost drivers

Based on attorney hours

                                                Litigation                     |            Consulting

Allocated costs                            $360,000                                   $225,000

Research & Development              +67,500                                     +67,500

Total Overhead Costs                     $427,500                                   $292,500

Based on number of employees

                                                Litigation                     |            Consulting

Allocated costs                            $240,000                                   $180,000

Research & Development             +150,000                                  +150,000

Total Overhead Costs                     $390,000                                   $330,000

To answer your question simply: yes, choice of cost driver does affect the costs of each production department.

• Litigation has a total overhead cost of $427,500 when allocating based on attorney hours and has a total overhead cost of $390,000 when allocating based on number of employees.
• Consulting has a total overhead cost of $292,500 when allocating based on attorney hours and has a total overhead cost of $330,000 when allocating base on number of employees.

Assume that the company uses attorney hours to allocate general overhead costs. For litigation department, the costs charged to each case are made up of four elements:

• Direct attorney costs (charged at $50 per hour)
• Direct materials and supplies used
• General overheads are applied by direct attorney hours
• Costs allocated from the service department is assigned to cases by direct attorney hours incurred within the department

The information on one of its cases during this period is given as follows:                                                              

                                                                        Case 618

Direct attorney-hours                                    150           

Direct Materials and supplies                   $5000           

c. (1.5 point) What are the total costs accumulated for Case 618? The company charged the client $30,000 for the service, what is the profit the company earned?

d. (0.5 point) Suppose the firm’s annual revenue is 2 million dollars. The corporate tax rate is 35%. How much taxes shall the company pay? Does the choice of cost driver affect the total taxes due?

[HA260] Hospitality Managerial Accounting

Assignment #6

Name: _____________________

[Note] You are required to provide the process for full-credit consideration. If you provide just final answers, you will get credits up to 50% of full-credit.

Holly’s Hotel budgeted 800 room sales for the week ended April 24. The estimated average price per room was $18.50. The actual average price per room was 10 percent greater than anticipated, while room sales in units were 10 percent less than forecasted.

Complete the following table for the Hotel’s revenue variance analysis.

Calculate the budget variance.

Calculate the price variance.

Calculate the volume variance.

Calculate the price-volume variance.

For the same week, Holly’s Hotel’s head housekeeper, based on the work standard, budgeted 400 hours for room attendants to clean the rooms sold. The actual hours worked totaled 380. The estimated average wage rate for the attendants is $4.00 per hour. The wages paid totaled $1,444.

Complete the following table for the Hotel’s expense variance analysis.

Calculate the ATAO (Allowable time for actual output).

How many rooms can a room attendant clean per hour?

Given that 720 rooms had to be cleaned, how much time should have been spent in hours (ATAO)?

Calculate the efficiency variance.

What does the efficiency variance tell you? Were the room attendants efficient?

Calculate the rate variance.

Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. At Q = 999, the firm's total costs is $______________. Why?

20. Let's say a product was traded in a fully competitive market and the market price of this product was given at 50. The total cost function C=10+2Q+3Q2 indicating the relationship between the total cost and output of this company was given. Find the profit maximization output and profit margin.

axbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,700 units, its average costs per unit are as follows:

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,700 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell 5,700 units?

c. If 6,700 units are sold, what is the variable cost per unit sold? (Round "Per unit" answer to 2 decimal places.)

d. If 6,700 units are sold, what is the total amount of variable costs related to the units sold?

e. If 6,700 units are produced, what is the average fixed manufacturing cost per unit produced? (Round "Per unit" answer to 2 decimal places.)

f. If 6,700 units are produced, what is the total amount of fixed manufacturing cost incurred?

g. If 6,700 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis? (Round "Per unit" answer to 2 decimal places.)

h. If the selling price is $23.10 per unit, what is the contribution margin per unit sold? (Round "Per unit" answer to 2 decimal places.)

i. If 4,700 units are produced, what is the total amount of direct manufacturing cost incurred?

j. If 4,700 units are produced, what is the total amount of indirect manufacturing cost incurred?

k. What incremental manufacturing cost will the company incur if it increases production from 5,700 to 5,701 units? (Round "Per unit" answer to 2 decimal places.)

Garrison 17e Rechecks 2020-09-09

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