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Question
1 (1 point)

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Maxx Inc. has provided the following
data from its activity-based costing system:

Activity Cost Pools Total Cost
Total Activity

Designing
products
$389,400 6,490
product design hours

Setting up
batches
$52,678
7366 batch set-ups

Assembling
products
$25,122 4,018
assembly hours

The activity rate for the “designing
products” activity cost pool is:

Your Answer:

Question 1 options:

Answer

Question 2 (1 point)

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Sasha Company allocates the
estimated $183,900 of its accounting department costs to its production and
sales departments since the accounting department supports the other two
departments particularly with regard to payroll and accounts payable functions.
The costs will be allocated based on the number of employees using the direct
method. Information regarding costs and employees follows:

Department

Employees

Accounting

4

Production

33

Sales

10

How much of the accounting department
costs will be allocated to the production?

Your Answer:

Question 2 options:

Answer

Question 3 (1 point)

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Medusa Company allocates costs
from the payroll department (S1) and the maintenance department (S2) to the
molding (P1), finishing (P2), and packaging (P3) departments. Payroll
department costs are allocated based on the number of employees in the
department and maintenance department costs are allocated based on the number
of square feet which the production department occupies within the
factory. Information about the departments is presented below:

Number
of

Number
of Square

Department

Costs

Employees

Feet
Occupied

Payroll (S1)

$148,000

2

2,000

Maintenance (S2)

$220,000

8

64,000

Molding (P1)

65

100,000

Finishing (P2)

46

60,000

Packaging (P3)

23

40,000

Medusa uses the direct method
to allocate costs. Round all answers to the nearest dollar.
What amount of the payroll department costs will be allocated to the molding
department?

Your Answer:

Question 3 options:

Answer

Question 4 (1 point)

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The Manassas Company
has 55 obsolete keyboards that are carried in inventory at a cost of
$9,600. If these keyboards are upgraded at a cost of $6,500, they could
be sold for $18,400. Alternatively, the keyboards could be sold “as
is” for $7,400. What is the net advantage or disadvantage of re-working
the keyboards?

Your Answer:

Question 4 options:

Answer

Question 5 (1 point)

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Ritz Company sells fine
collectible statues and has implemented activity-based costing. Costs in the
shipping department have been divided into three cost pools. The first cost
pool contains costs that are related to packaging and shipping and Rand has
determined that the number of boxes shipped is an appropriate cost driver for
these costs. The second cost pool is made up of costs related to the final
inspection of each item before it is shipped and the cost driver for this pool
is the number of individual items that are inspected and shipped. The final
cost pool is used for general operations and supervision of the department and
the cost driver is the number of shipments. Information about the department is
summarized below:

Cost Pool

Total
Costs

Cost
Driver

Annual
Activity

Packaging and shipping

$164,900

Number of boxes shipped

24,800 boxes

Final inspection

$199,800

Number of individual items shipped

99,100 items

General operations and supervision

$80,200

Number of orders

8,300 orders

During the period, the Far East
sales office generated 652 orders for a total of 6,190 items. These
orders were shipped in 1,365 boxes. What amount of shipping department
costs should be allocated to these sales?

Your Answer:

Question 5 options:

Answer

Question 6 (1 point)

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Baller Financial is a banking
services company that offers many different types of checking accounts. The
bank has recently adopted an activity-based costing system to assign costs to
their various types of checking accounts. The following data relate to the
money market checking accounts, one of the popular checking accounts, and the
ABC cost pools:
Annual number of accounts = 52,000 accounts Checking
account cost pools:

Cost Pool

Cost

Cost Drivers

Returned check costs

$2,760,000

Number of returned checks

Checking account reconciliation
costs

52,000

Number of account reconciliation
requests

New account setup

644,000

Number of new accounts

Copies of cancelled checks

388,000

Number of cancelled check copy
requests

Online banking web site
maintenance

189,000

Per product group (type of
account)

Annual activity information related
to cost drivers:

Cost Pool

All
Products

Money Market Checking

Returned check

200,000 returned checks

18,000

Check reconciliation costs

388,000 checking account

420

New accounts

60,000 new accounts

15,000

Cancelled check copy requests

100,000 cancelled check

60,000

Web site costs

2 types of accounts

1

Calculate the overhead cost per
account for the Money Market Checking.

Your Answer:

Question 6 options:

Answer

Question 7 (1 point)

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Sosa Company has $39 per unit in
variable costs and $1,900,000 per year in fixed costs. Demand is
estimated to be 138,000 units annually. What is the price if a
markup of 35% on total cost is used to determine the price?

Your Answer:

Question 7 options:

Answer

Question 8 (1 point)

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Bob’s Company sells one product
with a variable cost of $5 per unit. The company is unsure what price to
charge in order to maximize profits. The price charged will also affect
the demand. If fixed costs are $100,000 and the following chart
represents the demand at various prices, what price should be charged in order
to maximize profits?

Units
Sold
Price

30,000
$10

40,000
$9

50,000
$8

60,000
$7

Question 8 options:

$10

$9

$8

$7

Question 9 (1 point)

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A retailer purchased some trendy
clothes that have gone out of style and must be marked down to 30% of the
original selling price in order to be sold. Which of the following is a
sunk cost in this situation?

Question 9 options:

the original selling price

the anticipated profit

the original purchase price

the current selling price

Question 10 (1 point)

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Carlton Products Company has
analyzed the indirect costs associated with servicing its various customers in
order to assess customer profitability. Results appear below:

Cost Pool

Annual
Cost

Cost Driver

Annual
Driver Quantity

Processing electronic orders

$1,000,000

Number of orders

500,000

Processing non-electronic orders

$2,000,000

Number of orders

400,000

Picking orders

$3,000,000

Number of different products
ordered

800,000

Packaging orders

$1,500,000

Number of items ordered

50,000,000

Returns

$2,000,000

Number of returns

50,000

If all costs were assigned to
customers based on the number of items ordered, what would be the cost per item
ordered?

Your Answer:

Question 10 options:

Answer

Question 11 (1 point)

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Costa Company has a capacity of
40,000 units per year and is currently selling 35,000 for $400 each. Barton
Company has approached Costa about buying 2,000 units for only $300 each. The
units would be packaged in bulk, saving Costa $20 per unit when compared to the
normal packaging cost. Normally, Costa has a variable cost of $280 per unit.
The annual fixed cost of $2,000,000 would be unaffected by the special order.
What would be the impact on profits if Costa were to accept this special order?

Question 11 options:

Profits would increase $40,000.

Profits would increase $60,000.

Profits would decrease $200,000.

Profits would increase $80,000

Question 12 (1 point)

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A company has $6.40 per unit in
variable costs and $4.50 per unit in fixed costs at a volume of 50,000 units.
If the company marks up total cost by 0.59, what price should be charged if
65,000 units are expected to be sold?

Your Answer:

Question 12 options:

Answer

Question 13 (1 point)

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Customer profitability analysis
might result in:

Question 13 options:

dropping some customers that are
unprofitable.

lowering price or offering
incentives to profitable customers.

giving incentives to all customers
to place orders online.

All of the above.

Question 14 (1 point)

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The Estrada Company uses
cost-plus pricing with a 0.35 mark-up. The company is currently selling
100,000 units at $12 per unit. Each unit has a variable cost of
$5.60. In addition, the company incurs $196,500 in fixed costs
annually. If demand falls to 77,600 units and the company wants to
continue to earn a 0.35 return, what price should the company charge?

Your Answer:

Question 14 options:

Answer

Question 15 (1 point)

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A new product is being designed by
an engineering team at Golem Security. Several managers and employees from the
cost accounting department and the marketing department are also on the team to
evaluate the product and determine the cost using a target costing methodology.
An analysis of similar products on the market suggests a price of $122.00 per
unit. The company requires a profit of 0.28 of selling price. How much is
the target cost per unit?

Your Answer:

Question 15 options:

Answer

Question 16 (1 point)

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A company using activity based
pricing marks up the direct cost of goods by 0.22 plus charges customers for
indirect costs based on the activities utilized by the customer. Indirect costs
are charged as follows: $7.80 per order placed; $2.20 per separate item
ordered; $29.80 per return. A customer places 6 orders with a total direct
cost of $2,700, orders 293 separate items, and makes 3 returns. What
will the customer be charged?

Your Answer:

Question 16 options:

Answer

Question 17 (1 point)

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A law firm uses activity-based
pricing. The company’s activity pools are as follows:

Cost Pool

Annual
Estimated Cost

Cost Driver

Annual
Driver Quantity

Consultation

180,000

Number of consultations

100 consultations

Administrative Costs

139,000

Admin labor hours

10,000 labor
hours

Client Service

94,000

Number of clients

120 clients

The firm had two consultations with
this client and required 130 administrative labor hours. What additional costs
will be charged to this customer?

Your Answer:

Question 17 options:

Answer


  

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