Crowdly

Company X ends the month with two jobs still in progress. Job 5 has $10000 of materials,

$2000 of direct labor and $5154 of manufacturing overhead allocated. Job 6

was $30000 of materials, $2000 of direct labor and $10000 of manufacturing

overhead allocated. The cost of goods sold for the month was $40000 and of that

30% was overhead. There were no finished goods in stock as the month ends. If

the manufacturing overhead is underallocated by $10000, which of the following

choices would be the correct way to prorate it, assuming the proration is based

on the allocated overhead in the ending balances of work-in-process, finished

goods, and cost of goods sold?

None of the others

Cost of goods sold should be increased by $10000

Cost of goods sold should be increased by $4419

Job 5 should be allocated another $3683 of cost

Job 6 should be allocated another $1898 of cost

make the part, as this would save $15 per unit

Company X produces a part that is used in the manufacture of one of its

products. The costs associated with the production of 15400 units of this

part are as follows:

Direct materials	$85000
Direct labor	125000
Variable factory overhead	60000
Fixed factory overhead	135000
Total costs	$405000

Of the fixed factory overhead costs, $58267

is avoidable. Company Y has offered to sell 15400 units of the same

part to Company X for $36 per unit.

Assuming there is no other use for the

facilities, Company X should (round the final answer to the nearest unit):

buy the part, as this would save the company $328267

None of the others

buy the part, as this would save $10 per unit

make the part, as this would save $10 per unit

Company X produces two product lines: T-shirts

and Sweatshirts. Product profitability is analyzed as follows:

	T-SHIRTS	SWEATSHIRTS
Production and sales volume	72000 units	30000 units
Selling price	$16	$29
DM	$2.5	$5
DL	$4.8	$7.2
Manufacturing OH	$1.2	$3
Gross profit	$7.5	$13.8
Selling and administrative	$3.9	$7
Operating profit	$3.6	$6.8

Company X's managers have decided to revise their current assignment of overhead

costs to reflect the following ABC cost information:

Activity	Activity cost	Activity-cost driver
Supervision	$144840	Direct labor hours (DLH)
Inspection	$187569	Inspections

Activities Demanded

T-SHIRTS	SWEATSHIRTS
0.75 DLH/unit	1.60 DLH/unit
54000 DLHs	48000 DLHs
50000 inspections	20000 inspections

Under the revised ABC system,

overhead costs per unit for the Sweatshirts will be: (Round the final answer to the nearest cent)

Which of the following is a reason that has accelerated the demand for refinements to the costing system?

The increased of automated processes has led to the increase in direct manufacturing cost leading to a decrease in break-even point.

The use of product and process technology has led to an increase in indirect costs and a decrease in direct costs.

The declining demand for customized products has led managers to decrease the variety of products and services their companies offer.

None of the others

The increasing competition in product markets has led to an increase in contribution margin resulting in a decrease of break-even point.

Company X's president has heard that there are multiple

breakeven points for every product. He does not believe this and has asked you

to provide the evidence of such a possibility. Some information about the

company for 2020 is as follows:

Total fixed manufacturing overhead	$183000
Total other fixed expenses	$202000
Total variable manufacturing expenses	$260000
Total other variable expenses	$290000
Units produced	70000	units
Budgeted production	70000	units
Units sold	50000	units
Selling price	$74

What are breakeven sales in units

using variable costing? (Round to the nearest unit)

When there is an excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price if:

the company placing the order is in the same market segment as your current customers

incremental revenues exceed incremental costs

incremental revenue equals incremental operating income

none of the others

additional fixed costs is incurred to accommodate the order

John's

8-year-old Car requires repairs estimated at $11000 to make

it road worthy again. His wife suggested that he should buy a

5-year-old used Jeep instead for $11000 cash. Estimated costs for the two cars are the following:

	8-yr-old Car	Jeep
Acquisition cost	$30000	$11000
Repairs	$11000	—
Annual operating costs
(Gas, maintenance, insurance)	$2443	$2180

What should John do? What are his

savings in the first year?

Company X operates

on a contribution margin of 36% and currently has fixed costs of $510000.

Next year, sales are projected to be $3100000. An advertising campaign is being

evaluated that costs an additional $110000. How much would sales have to

increase to justify the additional expenditure? (Round the final answer to the nearest dollar unit)

Which of the following sentences is TRUE?

Job order operations are limited to manufacturing operations.

There are two basic types of cost accounting systems: job order cost accounting and manufacturing cost accounting.

The allocation of factory overhead to goods in process is usually accomplished by means of a predetermined overhead allocation rate.

An architect firm uses process costing to determine each project's cost.

The amount of overhead underapplied or overapplied must be allocated to the Goods in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold accounts.