Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
| Processing | $ | 5,945 |
| Supervising | $ | 19,680 |
| Other | $ | 11,300 |
Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
| MHs (Processing) |
Batches (Supervising) |
|
| Product M0 | 13,700 | 400 |
| Product M5 | 800 | 400 |
| Total | 14,500 | 800 |
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
| Product M0 | Product M5 | |||
| Sales (total) | $ | 81,800 | $ | 94,400 |
| Direct materials (total) | $ | 29,400 | $ | 32,300 |
| Direct labor (total) | $ | 28,700 | $ | 42,600 |
What is the product margin for Product M5 under activity-based costing?
Multiple Choice
$23,700
$19,500
$9,332
$8,243
In: Accounting
Flexible Budget for Selling and Administrative Expenses for a Service Company
Cloud Productivity Inc. uses flexible budgets that are based on the following data:
| Sales commissions | 15% of sales |
| Advertising expense | 18% of sales |
| Miscellaneous administrative expense | $8,000 per month plus 12% of sales |
| Office salaries expense | $29,000 per month |
| Customer support expenses | $13,000 per month plus 20% of sales |
| Research and development expense | $30,000 per month |
Prepare a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.)
| Cloud Productivity Inc. | |||
| Flexible Selling and Administrative Expenses Budget | |||
| For the Month Ending March 31 | |||
| Total sales | $400000 | $500000 | $600000 |
| Variable cost: | |||
| Sales commissions | $ | $ | $ |
| Advertising expense | |||
| Miscellaneous administrative expense | |||
| Customer support expenses | |||
| Total variable cost | $ | $ | $ |
| Fixed cost: | |||
| Miscellaneous administrative expense | $ | $ | $ |
| Office salaries expense | |||
| Customer support expenses | |||
| Research and development expense | |||
| Total fixed cost | $ | $ | $ |
| Total selling and administrative expenses | $ | $ | $ |
In: Accounting
Flexible Budget for Selling and Administrative Expenses for a Service Company
Morningside Technologies Inc. uses flexible budgets that are based on the following data:
| Sales commissions | 5% of sales |
| Advertising expense | 19% of sales |
| Miscellaneous administrative expense | $1,850 per month plus 3% of sales |
| Office salaries expense | $17,000 per month |
| Customer support expenses | $2,600 plus 4% of sales |
| Research and development expense | 5,750 per month |
Prepare a flexible selling and administrative expenses budget for April for sales volumes of $115,000, $145,000, and $175,000. Enter all amounts as positive numbers.
| Morningside Technologies Inc. | |||
| Flexible Selling and Administrative Expenses Budget | |||
| For the Month Ending April 30 | |||
| Total sales | $115,000 | $145,000 | $175,000 |
| Variable cost: | |||
| Sales commissions | $ | $ | $ |
| Advertising expense | |||
| Miscellaneous administrative expense | |||
| Customer support expense | |||
| Total variable cost | $ | $ | $ |
| Fixed cost: | |||
| Miscellaneous administrative expense | $ | $ | $ |
| Office salaries expense | |||
| Customer support expense | |||
| Research and development expense | |||
| Total fixed cost | $ | $ | $ |
| Total selling and administrative expenses | $ | $ | $ |
In: Accounting
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
| Processing | $ | 4,025 |
| Supervising | $ | 30,420 |
| Other | $ | 10,700 |
Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
| MHs (Processing) |
Batches (Supervising) |
|
| Product M0 | 10,900 | 650 |
| Product M5 | 600 | 650 |
| Total | 11,500 | 1,300 |
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
| Product M0 | Product M5 | |||
| Sales (total) | $ | 78,000 | $ | 91,400 |
| Direct materials (total) | $ | 28,800 | $ | 31,700 |
| Direct labor (total) | $ | 28,100 | $ | 42,000 |
What is the product margin for Product M5 under activity-based costing?
Multiple Choice
$17,700
$2,075
$2,280
$21,100
In: Accounting
| INCOME STATEMENT | |||||||
| YEAR ENDED DECEMBER 31, 200 | |||||||
| Change | Upcoming | ||||||
| Sales | Year | ||||||
| Food | $1,120,964 | ||||||
| Beverage | $ 465,200.00 | ||||||
| Total Sales | $ 1,586,164.00 | ||||||
| Cost of Sales | |||||||
| Food | 35.0% | $ 392,337.00 | |||||
| Beverage | 22.0% | $ 102,344.00 | |||||
| Total Cost of Sales | $ 494,681.00 | ||||||
| Gross Profit | $ 1,091,483.00 | ||||||
| Controllable Expenses | |||||||
| Salaries and Wages | $ 396,541.00 | ||||||
| Employee Benefits | 25.0% | $ 99,135.00 | |||||
| Other Controllable Expenses | $ 275,330.00 | ||||||
| Total Controllable Expenses | $ 771,006.00 | ||||||
| Income Before Occupancy costs | ancy Costs, | $ 320,477.00 | |||||
| Interest, Depreciation, and Income Taxes | |||||||
| Occupancy Costs | $ 75,230.00 | ||||||
| Interest | $ 25,600.00 | ||||||
| Depreciation | $ 79,099.00 | ||||||
| Total | $ 179,929.00 | ||||||
| Restaurant Profit | $ 140,548.00 | ||||||
| 1. Both food and beverage sales are expected to increase by 5 percent. | |||||||
| 2. Food and beverage cost percentages will remain the same. | |||||||
| 3. Salaries and wages will increase by 4 percent. | |||||||
| 4. The cost of employee benefits will increase, but will continue to be the same percentage of salaries and wages. | |||||||
| 5. Other controllable costs will increase by $6500. | |||||||
| 6. Occupancy costs will increase by $2000. | |||||||
| 7. Interest and depreciation will remain the same. | |||||||
In: Accounting
Production Report
Tomar Company produces vitamin energy drinks. The Mixing Department, the first process department, mixes the ingredients required for the drinks. The following data are for April:
| Work in process, April 1 | — |
| Quarts started | 90,000 |
| Quarts transferred out | 75,000 |
| Quarts in EWIP | 15,000 |
| Direct materials cost | $84,000 |
| Direct labor cost | $168,000 |
| Overhead applied | $336,000 |
Direct materials are added throughout the process. Ending inventory is 60 percent complete with respect to direct labor and overhead.
Required:
Prepare a production report for the Mixing Department for April. If an answer is zero, enter "0".
| Tomar Company | ||
| Mixing Department | ||
| Production Report for April | ||
| Unit Information | ||
| Units to account for: | ||
| Units in beginning work in process | ||
| Units started | ||
| Total units to account for | ||
| Physical Flow | Equivalent Units | |
| Units accounted for: | ||
| Units completed | ||
| Units in ending work in process | ||
| Total units accounted for | ||
| Work completed | ||
| Cost Information | ||
| Costs to account for: | ||
| $ | ||
| Total costs to account for | $ | |
| Cost per equivalent unit | $ | |
| Costs accounted for: | ||
| $ | ||
| Total costs accounted for | $ | |
In: Accounting
1. A shortcoming of return on investment (ROI) is that it may not lead managers to accept good investment opportunities if
|
a. |
ROI of the investment is higher than the present ROI of the division. |
|
b. |
the ROI of the investment is the same as the present ROI of the division. |
|
c. |
the ROI of the investment is lower than the present ROI of the division. |
|
d. |
None of the answers is correct. |
2. Which of the following statements is true concerning economic value added (EVA)?
|
a. |
EVA alleviates the shortcoming of the return on investment measurement. |
|
b. |
EVA calculates a percentage for comparison purposes. |
|
c. |
EVA is required by the New York Stock Exchange. |
|
d. |
EVA is the same as economic payback analysis. |
3. Which of the following defines Economic value added (EVA)?
|
a. |
annual after-tax operating profit minus the total annual cost of capital. |
|
b. |
annual before-tax operating profit minus the total annual cost of capital. |
|
c. |
annual after-tax operating profit plus the total annual cost of capital. |
|
d. |
annual before-tax operating profit plus the total annual cost of capital. |
In: Accounting
Flexible Budget for Selling and Administrative Expenses for a Service Company
Morningside Technologies Inc. uses flexible budgets that are based on the following data:
| Sales commissions | 9% of sales |
| Advertising expense | 17% of sales |
| Miscellaneous administrative expense | $1,750 per month plus 2% of sales |
| Office salaries expense | $17,000 per month |
| Customer support expenses | $2,500 plus 3% of sales |
| Research and development expense | 4,400 per month |
Prepare a flexible selling and administrative expenses budget for April for sales volumes of $110,000, $140,000, and $165,000. Enter all amounts as positive numbers.
| Morningside Technologies Inc. | |||
| Flexible Selling and Administrative Expenses Budget | |||
| For the Month Ending April 30 | |||
| Total sales | $110,000 | $140,000 | $165,000 |
| Variable cost: | |||
| Sales commissions | $ | $ | $ |
| Advertising expense | |||
| Miscellaneous administrative expense | |||
| Customer support expenses | |||
| Total variable cost | $ | $ | $ |
| Fixed cost: | |||
| Miscellaneous administrative expense | $ | $ | $ |
| Office salaries expense | |||
| Customer support expenses | |||
| Research and development expense | |||
| Total fixed cost | $ | $ | $ |
| Total selling and administrative expenses | $ | $ | $ |
In: Accounting
8) For each of the following costs incurred at Brockton
Hospital, indicate whether it would most
likely be a direct cost or an indirect cost of the specified cost
object. (12 pts)
Cost Cost Object Direct Cost/Indirect Cost
Example Catered food served to patients A particular patient Direct
Cost direct cost
1 Wages of pediatric nurses Pediatric department ?
2 Heating the hospital Pediatric department ?
3 Salary of the head of pediatrics A particular pediatric patient
?
4. Lab tests by outside contractor A particular patient ?
5 Lab tests by outside contractor A particular department ?
9) The BSU Works assembles custom computers from components
supplied by various
manufactures. The company is very small and its assembly shop and
retail sales store are
housed in a single facility in Bridgewater, Mass. Listed below are
some or the costs that are
incurred at the company. For each cost, indicate whether it would
most likely be classified as
direct materials, direct labor, manufacturing overhead, selling, or
an administrative cost. (10
pts)
A) The cost of a hard drive installed in a
computer_______________________________.
B) The cost of advertising in the local
newspaper________________________________.
C) The wages of the employees who assemble computers from
components__________.
D) The salary of the assembly shop’s
supervisor_________________________________.
E) The salary of the company’s
accountant_____________________________________.
10) You have a summer job as an intern at Drones-R-Us, a company that manufactures spy cameras for remote controlled military drones. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The back requires financial statements before approving the loan. You are tasked with classifying each cost listed as either a product cost or a period cost in order to prepare the FS for the bank. (10 pts)
Costs Product Cost or Period Cost
1 Depreciation on salespersons vehicles ?
2 The cost of packaging the company’s product ?
3 Lubricants used for machine maintenance ?
4 Factory supervisors salaries ?
5 Advertising costs ?
11) AG Corp uses a plantwide predetermined overhead rate of $22.70 per direct labor-hour. This POHR was based on a cost formula that estimated $272,400 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $267,000 and 11,600 total direct labor-hours during the period. Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period. (3 pts) Manufacturing overhead applied = $_______________
Formulas Y = a + bX Applied Overhead = POHR x Actual Direct Labor Hours POHR = Estimated total manufacturing overhead cost for the coming period / Estimated total units in the allocation base for the coming period
In: Accounting
Assume the short run variable cost function for Japanese beer is VC=0.5q^0.67
If the fixed cost (F) is $1500 and the firm produces 600units, determine the total cost of production (C), the variable cost of production (VC), the marginal cost of production (MC), the average fixed cost of production (AFC), and the average variable cost of production (AVC). What happens to these costs if the firm increases its output to 650?
Assuming the firm produces 600 units, the variable cost of production (VC) is
VC=???????. (Enter your response rounded to two decimalplaces.)
The total cost of production (C) is C=$????.?? (Enter your response rounded to two decimal places.)
The marginal cost of production (MC) is MC=$?.?? (Enter your response rounded to two decimal places.)
The average fixed cost of production (AFC) is AFC=$?.?? (Enter your response rounded to two decimal places.)
The average variable cost of production (AVC) is AVC=$?.??(Enter your response rounded to two decimal places.)
Now suppose the firm increases output to 750 units.
The variable cost of production (VC) is VC=$???.?? (Enter your response rounded to two decimal places.)
The total cost of production (C) is C=$????.?? (Enter your response rounded to two decimal places.)
The marginal cost of production (MC) is MC= $?.?? (Enter your response rounded to two decimal places.)
The average fixed cost of production (AFC) is AFC=$?.?? (Enter your response rounded to two decimal places.)
The average variable cost of production (AVC) is AVC=$?.?? (Enter your response rounded to two decimalplaces.)
In: Economics