1. Dail and Associates has three departments:advertising, sales, and information systems. The departments occupy a 2,000 square feet, 1,000 square feet, and 1,000 square feet of office space, respectively (in that order). The company pays $5,000 per month to rent offices.

How much monthly rent cost should Dail and Associates allocate to the information systems department? ___________

Hint: determine the rate per square foot and then calculate the allocation per the IS department.

The activity is the monthly rent and the cost driver is the total office space.

The answer should be entered in whole dollars with no $. Do use a comma. For example: 5,000

2. Below is the income statement for Robinson Company, a merchandising firm. If you take this information and prepare contribution margin income statement, what will the variable costs be, the contribution margin beand the fixed costs beto arrive at net income of $12,000?

Hint: All information will be used. Sort your costs by variable and fixed. Then, follow the contribution margin income statement.

Do not use a $. Do use a comma. Do use a parenthesis ( ) around amounts to show where deducted. For example, (10,000)

Robinson Company

Income Statement

For the Year Ended December 31, 2019

Sales revenue (2,400 units x $100)$240,000

Cost of goods sold (2,400 units x $65)(156,000)

Gross margin84,000

Sales commissions (10% of sales)(24,000)

Administrative salaries expense(15,000)

Advertising expense(20,000)

Depreciation expense(10,600)

Shipping and handling expenses (2,400 units x $1.00)(2,400)

Net Income$ 12,000

3.Houston Company produces a product that sells for $175 per unit and has variable costs of $50 per unit. Houston's annual fixed costs are $200,000, and the company wishes to earn a profit of $80,000.

What is the sales volume in unitsand in dollarsrequired to earn the "desired profit."

List units with a comma. For example 1,000

List sales dollars with a dollar symbol. Do use a comma. For example, $1,000

4.ABC company is trying to decide which of two different kinds of chips to sell in the retail store. One type is a name-brand chip that will practically sell itself. The other chip is less expensive to purchase but does not carry an identifiable brand name. The Controller believes the company would have to incur significant advertising costs to sell this chip. Costs for the two chips are detailed below.

Brandless ChipsName-Brand ChipsCost per box$5.00Cost per box$7.00Sales Commission per box$1.50Sales Commission per box$1.50Rent of display space$700.00Rent of display space$700.00Advertising$4,500.00Advertising$3,000.00

Identify each cost asrelevantorirrelevantto the decision-making process.

Cost per box is

Sales commission per box is

Rent of display space is

Advertising is