Practice Questions.Offshore Company makes 2 different types of boats, sail and fishing boats. The company consists of two different departments, design & engineering and production. The company has decided to allocate overhead costs in each of the two cost pools. Data on estimated overhead follows:EstimatedSailFishActivity:DriverOverhead CostEstimateEstimateDesign# of designs$180,00022 designs23 designsProductionLabor hours$994,0004,500 hours2,500 hoursWhat overhead rates will be used in each department to assign costs to the sail boats?DesignProductionA.$8,182$220.89B.$88,000$639,000C.$4,000$142.00D.$4,000$220.89Offshore Company makes 2 different types of boats sail and fishing boats. The company consists of two different departments, design & engineering, and production. The company has decided to allocate overhead costs in each of the two cost pools. Data on estimated overhead follows:EstimatedSailFishingActivity:DriverOverhead CostEstimateEstimateDesign# of designs$180,00022 designs18 designsProductionLabor hours$945,0004,000 hours3,500 hoursIf the company produces and sells 22 sail boats, and each sail boat requires 180 labor hours, how much overhead will be assigned to each sail boat produced?A.$27,180B$22,680C$36,900D.$32,400Bristle Company produces brooms. Utility costs are allocated to products based on a percentage of material costs. Utility costs of $15,000 per month are budgeted and the store anticipates spending $30,000 in materials. By the end of the month, it was determined that actual utility costs were $14,500. If the company spends $6.50 per broom for materials, how much of the utility costs will be allocated to each broom?A.$0.50B.$0.48C.$3.14D.$3.25AC Consulting Company has purchased a new $15,000 copier. This overhead cost will be shared by the purchasing, accounting, and information technology departments since those are the only departments which will be able to access the machine. The company has decided to allocate the cost based on the number of copies made by each department. The copier is estimated to provide 1 million copies over its life. Each department has estimated the number of copies which will be made in their department over the life of the copier.DepartmentCopiesPurchasing350,000Accounting200,000Information Tech400,000How much overhead will be allocated each time a copy is made if cost allocations are computed to 4 significant digits?A.$63.3333B.$0.0158C.$66.6667D.$0.0150AC Consulting Company has purchased a new $18,038 copier. This overhead cost will be shared by the purchasing, accounting, and information technology departments since those are the only departments which will be able to access the machine. The company has decided to allocate the cost based on the number of copies made by each department. Each department has estimated the number of copies which will be made over the life of the copier.DepartmentCopiesPurchasing250,000Accounting300,000Information Tech425,000If cost allocations are computed to 4 significant digits and the purchasing department makes 58,000 copies this year, how much overhead will be allocated to purchasing?A.$4,185B.$4,624C.$77,750D.$1,073Sierra Company allocates the estimated $200,000 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:DepartmentEmployeesAccounting4Production36Sales12How much of the accounting department costs will be allocated to the production and sales departments?EmployeesDepartmentA.$150,000$50,000B.$180,000$60,000C.$1,800,000$600,000D.$22,222$66,667The building maintenance department for Jones Manufacturing Company budgets annual costs of $4,200,000 based on the expected operating level for the coming year. The costs are allocated to two production departments. The following data relate to the potential allocation bases:Production Dept. 1Production Dept. 2Square footage15,00045,000Direct labor hours25,00050,000If Jones assigns costs to departments based on square footage, how much total costs will be allocated to Production Department 1?A.$1,400,000B.$1,050,000C.$1,575,000D.$2,100,000The building maintenance department for Jones Manufacturing Company budgets annual costs of $4,200,000 based on the expected operating level for the coming year. The costs are allocated to two production departments. The following data relate to the potential allocation bases:Production Dept. 1Production Dept. 2Square footage15,00045,000Direct labor hours25,00050,000If Jones assigns costs to departments based on direct labor hours, how much total costs will be allocated to Production Department 2?A.$1,400,000B.$1,050,000C.$2,800,000D.$2,100,000Sweet Products produces mint syrup used by gum and candy companies. Recently, the company has had excess capacity due to a foreign supplier entering its market. Sweet Products is currently bidding on a potential order from Red Sugar Candy for 5,000 cases of syrup. The estimated cost of each case is $27.50, as follows: direct material, $10; direct labor, $5; and manufacturing overhead, $12.50. The overhead rate of $2.50 per direct labor dollar is based on estimated annual overhead of $1,500,000 and estimated direct labor of $600,000, composed of $400,000 of variable costs and $1,100,000 of fixed costs. The largest fixed cost relates to depreciation of plant and equipment. With respect to overhead, how much is the variable cost of producing a case of syrup?A.$13.33B.$15.00C.$18.33D.$17.50Kind, Meek, and Clean, attorneys-at-law, specialize in three areas: criminal, civil, and family law. When specifications for a new computer system were established, the partners agreed to allocate usage based on each department’s needs. Criminal law division needed 60% of the capacity, civil law 25%, and family law 15%. Variable costs for the computer department would be allocated on the number of computer minutes each division used. The computer department’s budgeted fixed costs are $700,000, and the budgeted variable costs $150,000. The firm estimates that 400,000 minutes of computer time will be used year.What amount of the computer department’s fixed costs will be allocated to the civil and family law divisions, respectively? (Compute cost allocation rates to 3 significant digits.)A.$37,500 and $22,500B.$175,000 and $105,000C.$233,333 and $233,333D.$212,500 and $ 127,500Maintenance costs at Winter Company are allocated to the production departments based on area occupied. Maintenance costs of $300,000 are budgeted to maintain a 60,000 square foot production area. If the finishing department occupies 25,000 square feet, how much of the maintenance department costs will be allocated to the finishing department?A.$125,000B.$175,000C.$100,000D.$5,000Mexican Spices Company makes two types of salsa, hot and mild. Information for the two flavors appears below:HotMildSales$400,000$600,000Direct materials$100,000$200,000Direct labor$50,000$150,000Labor hours5,00010,000Mexican Spices incurred $240,000 in overhead costs for the period.Assume that Mexican Spices allocates overhead cost to products based on the labor hours worked on each product. What is the overhead application rate?$10.00$15.00$16.00$13.33Memphis Manufacturing has two service departments, maintenance and personnel, and three production departments, fabrication, assembly, and packaging. Service costs are allocated to producing departments using the direct method. Information on overhead in each department and possible allocation bases appears below:MaintenancePersonnelFabricationAssemblyPackagingCost$180,000$224,000Machine Hours10,00030,00050,000Employees84403030How much maintenance cost will be allocated to assembly?A.$20,000B.$50,000C.$60,000D.$100,000Memphis Manufacturing has two service departments, maintenance and personnel, and three production departments, fabrication, assembly, and packaging. Service costs are allocated to producing departments using the direct method. Information on overhead in each department and possible allocation bases appears below:MaintenancePersonnelFabricationAssemblyPackagingCost$180,000$224,000Machine Hours10,00030,00050,000Employees84403030How much maintenance cost will be allocated to packaging?A.$20,000B.$50,000C.$60,000D.$100,000Memphis Manufacturing has two service departments, maintenance and personnel, and three production departments, fabrication, assembly, and packaging. Service costs are allocated to producing departments using the direct method. Information on overhead in each department and possible allocation bases appears below:MaintenancePersonnelFabricationAssemblyPackagingCost$180,000$224,000Machine Hours10,00030,00050,000Employees84403030How much personnel cost will be allocated to fabrication?A.$56,000B.$89,600C.$82,963D.$67,200Rand, Land, and Stan, CPA’s, has three divisions: audit, tax, and business consulting. When the specifications for the new computer system were established, the audit division needed 50% of the capacity, the tax division required 30%, and business consulting required 20%. The fixed computer department costs are allocated based on these percentages. The variable costs of the computer department are allocated based on the minutes of computer time that each department uses. The computer division budget for fixed costs is $450,000, and the budget for variable costs is $145,600. The company anticipates using 520,000 minutes of computer time.What amount of variable costs will be allocated when a division uses a minute of computer time?A.$4.50B.$2.80C.$1.15D.$0.28Rand, Land, and Stan, CPA’s, has three divisions: audit, tax, and business consulting. When the specifications for the new computer system were established, the audit division needed 50% of the capacity, the tax division required 30%, and business consulting required 20%. The fixed computer department costs are allocated based on these percentages. The variable costs of the computer department are allocated based on the minutes of computer time that each department uses. The computer division budget for fixed costs is $450,000, and the budget for variable costs is $145,600. The company anticipates using 520,000 minutes of computer time.If the audit division uses 250,000 minutes of computer time, what amount of variable costs will be allocated to the audit division (rounded to the nearest dollar)?A.$70,000B.$302,848C.$286,346D.$48,533Rand, Land, and Stan, CPA’s, has three divisions: audit, tax, and business consulting. When the specifications for the new computer system were established, the audit division needed 50% of the capacity, the tax division required 30%, and business consulting required 20%. The fixed computer department costs are allocated based on these percentages. The variable costs of the computer department are allocated based on the minutes of computer time that each department uses. The computer division budget for fixed costs is $450,000, and the budget for variable costs is $145,600. The company anticipates using 520,000 minutes of computer time.If the tax division uses 105,000 minutes of computer time this year, what is the total amount of computer department costs that will be allocated to the tax division (rounded to the nearest dollar)?A.$29,400B.$119,400C.$120,267D.$119,120Rand, Land, and Stan, CPA’s, has three divisions: audit, tax, and business consulting. When the specifications for the new computer system were established, the audit division needed 50% of the capacity, the tax division required 30%, and business consulting required 20%. The fixed computer department costs are allocated based on these percentages. The variable costs of the computer department are allocated based on the minutes of computer time that each department uses. The computer division budget for fixed costs is $450,000, and the budget for variable costs is $145,600. The company anticipates using 520,000 minutes of computer time.What amount of the computer department fixed costs will be allocated to the business consulting division?A.$150,000B.$29,120C.$90,000D.$119,120Elrod Electronics is a manufacturer of data storage devices. Elrod consists of two service departments, maintenance and computing, and two production departments, assembly and testing. Maintenance costs are allocated on the basis of square footage occupied, and computing costs are allocated on the basis of the number of computer terminals. The following data relate to allocations of service department costs:MaintenanceComputingAssemblyTestingService department costs$600,000$900,000Square footage20,00030,00090,00060,000 Terminals10302060How much service department costs will be allocated to the testing department using the direct method?A.$675,000B.$1,035,000C.$915,000D.$630,000Velvet 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 ofNumber of SquareDepartmentCostsEmployeesFeet OccupiedPayroll (S1)$150,00022,000Maintenance (S2)$220,000864,000Molding (P1)75100,000Finishing (P2)5060,000Packaging (P3)2540,000Velvet 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?A.$70,313B.$185,000C.$75,000D.$132,353Velvet 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 ofNumber of SquareDepartmentCostsEmployeesFeet OccupiedPayroll (S1)$150,00022,000Maintenance (S2)$220,000864,000Molding (P1)75100,000Finishing (P2)5060,000Packaging (P3)2540,000Velvet uses the direct method to allocate costs. Round all answers to the nearest dollar.When the payroll department costs are allocated, what is the amount per employee that will be charged to each of the departments?A.$937.50B.$15,000C.$6.67D.$1,000Velvet 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 ofNumber of SquareDepartmentCostsEmployeesFeet OccupiedPayroll (S1)$150,00022,000Maintenance (S2)$220,000864,000Molding (P1)75100,000Finishing (P2)5060,000Packaging (P3)2540,000Velvet 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 packaging department?A.$23,438B.$73,333C.$25,000D.$36,667Velvet 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 ofNumber of SquareDepartmentCostsEmployeesFeet OccupiedPayroll (S1)$150,00022,000Maintenance (S2)$220,000864,000Molding (P1)75100,000Finishing (P2)5060,000Packaging (P3)2540,000Velvet uses the direct method to allocate costs. Round all answers to the nearest dollar.When the maintenance department costs are allocated, what amount will be charged to the packaging department?A.$44,000B.$33,083C.$70,400D.$52,932Velvet 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 ofNumber of SquareDepartmentCostsEmployeesFeet OccupiedPayroll (S1)$150,00022,000Maintenance (S2)$220,000864,000Molding (P1)75100,000Finishing (P2)5060,000Packaging (P3)2540,000Velvet uses the direct method to allocate costs. Round all answers to the nearest dollar.When the maintenance department costs are allocated, what amount will be charged to the molding department?A.$44,000B.$82,707C.$110,000D.$52,932Bill Klinger, the manager of the service department at the Abscond Electronics Company, is evaluated based on the profit performance of his department. The profit of the department is down this year because the service department’s share of allocated general and administrative costs (allocated based on relative sales dollars) is much higher than last year. In the current year, service revenue has increased slightly while sales of handheld electronic game devices, the company’s major product, have decreased substantially. Why is the allocation of general and administrative costs to the service department higher in the current year?A.Due to the decrease of revenue in the sales departmentB.Due to the increase in total service revenueC.Due to the increase in costs of providing servicesD.Due to increased usage by the service departmentRand 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 PoolTotal CostsCost DriverAnnual ActivityPackaging and shipping$170,000Number of boxes shipped25,000 boxesFinal inspectionNumber of individual$200,000items shipped100,000 itemsGeneral operationsand supervision$85,000Number of orders10,000 ordersHow much are the packaging and shipping costs for each box shipped?A.$6.80B.$2.00C.$3.37D.$8.50Rand 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 PoolTotal CostsCost DriverAnnual ActivityPackaging and shipping$170,000Number of boxes shipped25,000 boxesFinal inspectionNumber of individual$200,000items shipped100,000 itemsGeneral operationsand supervision$85,000Number of orders10,000 ordersWhat amount is allocated to each order for the general operations and supervision of the department?A.$2.00B.$8.50C.$11.76D.$3.37Rand 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 PoolTotal CostsCost DriverAnnual ActivityPackaging and shipping$170,000Number of boxes shipped25,000 boxesFinal inspectionNumber of individual$200,000items shipped100,000 itemsGeneral operationsand supervision$85,000Number of orders10,000 ordersAn order is shipped to a retail customer who has ordered 10 individual items. This order will be shipped in 3 separate boxes. What is the shipping department cost that will be allocated to the order?A.$17.30B.$173.00C.$48.90D.$40.40Rand 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 PoolTotal CostsCost DriverAnnual ActivityPackaging and shipping$170,000Number of boxes shipped25,000 boxesFinal inspectionNumber of individual$200,000items shipped100,000 itemsGeneral operationsand supervision$85,000Number of orders10,000 ordersDuring the period, the Far East sales office generated 680 orders for a total of 6,120 items. These orders were shipped in 1,495 boxes. What amount of shipping department costs should be allocated to these sales?A.$28,186B.$22,406C.$10,588D.$16,590Mall Rack Company uses activity-based costing. The company produces soft and hard-cover books. The estimated costs and expected activity for each of the activity pools follow:ActivityEstimatedExpected ActivityCost PoolCostHard-CoverSoft-CoverTotalActivity 1$15,0008007001,500Activity 2$14,9005001,5002,000Activity 3$27,6008004001,200How much are total costs to be charged to hard-cover books?A.$30,125B.$8,000C.$84,945D.$25,691Magazine Company uses activity-based costing. The company produces weekly and monthly magazines. The estimated costs and expected activity for each of the activity pools follow:ActivityEstimatedExpected ActivityCost PoolCostWeeklyMonthlyTotalActivity 1$15,6758004001,200Activity 2$11,900500200700Activity 3$27,6008003001,100How much is the activity rate for activity 1?A.$19.00B.$13.06C.$18.10D.$14.25Magazine Company uses activity-based costing. The company produces weekly and monthly magazines. The estimated costs and expected activity for each of the activity pools follow:ActivityEstimatedExpected ActivityCost PoolCostWeeklyMonthlyTotalActivity 1$15,6758004001,200Activity 2$11,900500200700Activity 3$27,6008003001,100Total costs which would be charged to monthly magazines would be:A.$10,300B.$6,900C.$55,175D.$16,151Pewter Company produces two products, A and B. The annual production and sales of product A and B are 800 and 500 units, respectively. The company has traditionally used direct labor hours to apply manufacturing overhead. Product A requires 0.3 labor hours per unit and product B requires 0.2 labor hours per unit. The company has decided to utilize activity based costing with three cost pools. Estimated costs for each pool are as follows:EstimatedActivityOverheadExpected ActivityCost PoolCostsProduct AProduct BTotalActivity 1$24,025450420870Activity 2$16,8802,0007502,750General Factory $32,014120150270Total $72,919To which of the following is the overhead rate for activity 1 using activity based costing closest?A.$81.81B.$53.39C.$57.20D.$27.61Rolling Rock Company produces two products, A and B. The annual production and sales of product A and B are 800 and 500 units, respectively. The company has traditionally used direct labor hours to apply manufacturing overhead. Product A requires 0.3 labor hours per unit and product B requires 0.2 labor hours per unit. The company has decided to utilize activity based costing with three cost pools. Estimated costs for each pool are as follows:EstimatedActivityOverheadExpected ActivityCost PoolCostsProduct AProduct BTotalActivity 1 $33,0004505501,000Activity 2$12,6302,0001,0003,000General factory $32,014120150270Total $77,644When using activity based costing, to which of the following is the total overhead cost for one unit of product A closest?A.$18.56B.$346.43C.$59.73D.$46.87Vivian’s Flowers produces floral bouquets for commercial businesses (i.e. hotels) and uses an activity-based costing system. Data concerning overhead costs and activity pools is as follows:Activity Cost PoolEstimated WagesEstimated OtherBouquets$48,000$18,000Deliveries24,00010,00012,000Total$80,000$40,000During the year Vivian made 60,000 bouquets and made 5,000 deliveries. Using activity-based costing what is the approximate cost per bouquet?A.$2.00B.$1.10C.$0.91D.$0.80Vivian’s Flowers produces floral bouquets for commercial businesses (i.e. hotels) and uses an activity-based costing system. Data concerning overhead costs and activity pools is as follows:Activity Cost PoolEstimated WagesEstimated OtherBouquets$48,000$18,000Deliveries24,00010,00012,000Total$80,000$40,000During the year Vivian made 60,000 bouquets and made 5,000 deliveries. Using activity-based costing what is the approximate cost per delivery?A.$6.80B.$24.00C.$4.80D.$16.00Robin Company currently produces 8,000 units of part B13. Current costs for part B13 are as follows:Direct materials$12Direct labor9Factory rent7Administrative107Total$45If the company decides to buy part B13, 50% of the administrative costs would be avoided. All of the Robin Company items, including part B13, are manufactured in the same rented production facility. The company has an offer from a wholesaler that wishes to sell the part to Robin for $31 per unit. What effect will occur if the company decides to accept the offer?A.The cost for this part will increase by $5 per unit.B.The cost for this part will be the same.C.The cost for this part will decrease by $14 per unit.D.The cost for this part will decrease by $10 per unit.Walter Jewelry Company produces a bracelet which normally sells for $79.95. The company produces 1,500 units annually but has the capacity to produce 2,000 units. A special order for manufacturing and selling 200 bracelets at $49.95 has been received which would not disrupt current operations. Current costs for the bracelet are as follows:Direct materials$17.00Direct labor14.50Variable overhead4.005.00Total$40.50In addition, the customer would like to add a monogram to each bracelet which would require an additional $2 per unit in additional labor costs and Walter Jewelry would also have to purchase a piece of equipment to create the monogram which would cost $1,600. This equipment would not have any other uses. With regard to this special order, onlyA.incremental revenues will exceed incremental costs by $2,490.B.incremental revenues will exceed incremental costs by $890.C.incremental revenues will exceed incremental costs by $2,890D.incremental revenues will exceed incremental costs by $1,290NY Memorabilia Company produces a souvenir plate which normally sells for $79.95. The company produces 1,500 plates annually but has the capacity to produce 2,000 plates. A special order for manufacturing and selling 200 plates at $49.95 has been received which would not disrupt current operations. Current costs for the plate are as follows:Direct materials$17.00Direct labor14.50Variable overhead4.005.00Total$40.50In addition, the customer would like to add a date to each plate which would require an additional $2 per plate in additional labor costs and NY Memorabilia Company would also have to purchase a piece of equipment to create the date which would cost $1,200. This equipment would not have any other uses. Which statement is true with regard to this special order?A.Incremental revenues will exceed incremental costs by $2,490.B.Incremental revenues will exceed incremental costs by $890.C.Incremental revenues will exceed incremental costs by $2,890.D.Incremental revenues will exceed incremental costs by $1,290.Rockwell Company owns a single restaurant which has a cantina primarily used to seat patrons while they wait on their tables. The company is considering eliminating the cantina and adding more dining tables. Segmented contribution income statements are as follows and fixed costs applicable to both segments are allocated on the basis of sales.RestaurantCantinaTotalSales$800,000$200,000$1,000,000Variable costs475,000160,000635,000Direct fixed costs50,00015,00065,00037,500250,000Net Income$ 62,500($12,500)$50,000What financial effect will occur to profit if Rockwell eliminates the cantina but no more dining customers are served?A.Net income will increase by $12,500B.Net income will decrease to $37,500.C.Net income will decline by $25,000D.Net income will be $25,000Hydra Company has two locations, downtown and at a suburban mall. During March, the company reported total net income of $337,000 and sales of $1.2 million. The contribution margin in the downtown store was $320,000 (40% of sales). The contribution margin in the mall store is $200,000. Total fixed costs are $90,000 in the downtown store and $93,000 in the mall location. How much are sales at the mall location?A.$400,000B.$800,000C.$666,667D.Not enough information is provided to answer.Collegebooks Company has two locations, downtown and on campus. During March, the company reported net income of $164,000 and sales of $1.2 million. The contribution margin in the downtown store was $320,000 (32% of sales). The contribution margin in the campus store is $110,000. Direct fixed costs are $90,000 in the downtown store and $93,000 in the campus location. How much are total variable costs?A.$410,000B.$3,750,000C.$192,000D.$853,000Ricket Company has 1,500 obsolete calculators that are carried in inventory at a cost of $13,200. If these calculators are upgraded at a cost of $9,500, they could be sold for $22,500. Alternatively, the calculators could be sold “as is” for $9,000. What is the net advantage or disadvantage of reworking the calculators?A.$13,000 advantageB.$4,000 advantageC.$9,200 disadvantageD.$200 disadvantageBigByte Company has 12 obsolete computers that are carried in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they could be sold for $15,300. Alternatively, the computers could be sold “as is” for $9,000. What is the net advantage or disadvantage of reworking the computers?A.$6,300 advantageB.$1,200 disadvantageC.$5,400 disadvantageD.$3,000 advantageThe following are production and cost data for two products, buckets and pails.BucketsPailsContribution margin per unit$450$280Machine set-ups needed per unit2014The company can only perform 14,000 set-ups each period yet there is unlimited demand for each product. What is the maximum contribution margin for the year?A.$315,000B.$35,000C.$280,000D.$595,000The following are production and cost data for two products, A and B.Product AProduct BContribution margin per unit$450$340Machine set-ups needed per unit2520The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the maximum contribution margin for the year?A.$216,000B.$204,000C.$420,000D.$18,050,000Central Apparel Company owns two stores and management is considering eliminating the east
