1.

Buckeye Company has provided the following data for maintenance cost: Prior Year Current Year Machine hours 20,100 22,100 Maintenance cost $32,000 $35,000 Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: a. $1,850 per year plus $.667 per machine hour b. $33,150 per year plus $.667 per machine hour c. $1,850 per year plus $1.50 per machine hour d. $32,000 per year plus $1.50 per machine hour

2.

Management of Lewallen Corporation has asked your help as an intern in preparing some key reports for September. Direct materials cost was $58,000, direct labor cost was $44,000, and manufacturing overhead was $72,000. Selling expense was $16,000 and administrative expense was $33,000. The conversion cost for September was: a. $116,000 b. $132,000 c. $174,000 d. $107,000

3.

The following costs were incurred in September: Direct materials $41,000 Direct labor $25,200 Manufacturing overhead $17,200 Selling expenses $18,300 Administrative expenses $32,300

Prime costs during the month totaled: a. $134,000 b. $83,400 c. $42,400 d. $66,200

4.

Aberge Company's manufacturing overhead is 45% of its total conversion costs. If direct labor is $70,950 and if direct materials are $28,100, the manufacturing overhead is: a. $89,550 b. $26,383 c. $32,550 d. $58,050

5.

Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $512,000 or a new model 240 machine costing $408,000 to replace a machine that was purchased 12 years ago for $455,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A. Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $408,000 in the new machine, the money could be invested in a project that would return a total of $485,000.

In making the decision to buy the model 240 machine rather than the model 370 machine, the sunk cost was: a. $455,000 b. $485,000 c. $408,000 d. $512,000

6.

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $5,040 and is paid at the beginning of the first year. Seventy percent of the premium applies to manufacturing operations and thirty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

Product Period a. $5,040 $0 b. $3,528 $1,512 c. $2,352 $1,008 d. $1,176 $504

7.

The following costs were incurred in September: Direct materials $44,800 Direct labor $29,000 Manufacturing overhead $29,300 Selling expenses $26,800 Administrative expenses $37,100

Conversion costs during the month totaled: a. $167,000 b. $73,800 c. $58,300 d. $74,100

8.

Bakker Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product.

Production volume 5,300 units 6,300 units Direct materials $91.70 per unit $91.70 per unit Direct labor $27.60 per unit $27.60 per unit Manufacturing overhead $80.80 per unit $70.80 per unit

The best estimate of the total variable manufacturing cost per unit is: a. $119.30 b.$137.10 c. $162.50 d. $152.70

9.

Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $534,000 or a new model 240 machine costing $422,000 to replace a machine that was purchased 5 years ago for $473,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A. Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $422,000 in the new machine, the money could be invested in a project that would return a total of $469,000.

In making the decision to buy the model 240 machine rather than the model 370 machine, the differential cost was: a. $-4,000 b. $112,000 c. $51,000 d. $61,000