1. CraftMade Company expects to produce 12,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below:

ACTIVITIES:	UNIT	BATCH	PRODUCT	FACILITY
	LEVEL	LEVEL	LEVEL	LEVEL
Cost	$20,000	$18,000	$5,000	$72,000
Cost Driver	2,000 labor hrs	120 set ups	% of use	12,000 units

Production of 1,000 units of an auto towing tool required 300 labor hours, 13 setups, and consumed 25 % of the product sustaining activities. How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours? (Do not round intermediate calculations.)

$17,250$20,000$7,850$6,000

2.

Trail Power has been using the same machines to make its name brand clothing for the last 5 years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company $370,000. The old machines presently have a book value of $137,000 and a market value of $29,000. They are expected to have a 5 year remaining life and zero salvage value. The new machines would cost the company $270,000 and have operating expenses of $17,000 a year. The new machines are expected to have a 5 year useful life and no salvage value. The operating expenses associated with the old machines are $47,000 a year. The new machines are expected to increase quality, justifying a price increase, and thereby increasing sales revenue by $27,000 a year. Select the true statement. The company will be $74,000 better off over the 5 year period if it keeps the old equipment. The company will be $44,000 better off over the 5 year period if it replaces the old equipment. The company will be $29,000 better off over the 5 year period if it replaces the old equipment. The company will be $45,000 better off over the 5 year period if it keeps the old equipment.

3.

Sea Island Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below:

	Alternative A	Alternative B
Projected revenue	$240,000	$360,000
Unit-levelcosts	46,000	57,000
Batch-levelcosts	33,500	45,000
Product-levelcosts	36,000	38,000
Facility-levelcosts	31,000	33,500

What is the differential revenue for this decision?

$120,000$145,000$360,000$240,000

4.

Max bought aticket to the championship baseball game for $110. Someone approaches him outside the stadium and offers him $245 for his ticket. If Max decides to go to the game, instead of selling his ticket, how much does it cost Max to go to the game?

$245$135$110None of the above.