1. Erkkila Inc. reports that at an activity level of 6,500 machine-hours in a month, its total variable inspection cost is $426,080 and its total fixed inspection cost is $183,872.

What would be the average fixed inspection cost per unit at an activity level of 6,800 machine-hours in a month? Assume that this level of activity is within the relevant range.

$27.04

$93.84

$28.29

$37.26

2. Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:

Activities	Activity Rate
Setting up batches	$87.50	per batch
Processing customer orders	$78.13	per customer order
Assembling products	$13.01	per assembly hour

Data concerning two products appear below:

	Product V09X	Product A09X
Number of batches	71	14
Number of customer orders	22	11
Number of assembly hours	494	699

How much overhead cost would be assigned to Product V09X using the activity-based costing system?

$178.64

$157,941.30

$14,358.30

$6,212.50

3. Ofarrell Corporation, a company that produces and sells a single product, has provided its contribution format income statement for March.

Sales (6,300 units)	$415,800
Variable expenses	289,800
Contribution margin	126,000
Fixed expenses	103,500
Net operating income	$22,500

If the company sells 6,200 units, its net operating income should be closest to:

$20,500

$22,500

$21,979

$18,000

4. Rehmer Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.05 direct labor-hours. The direct labor rate is $9.90 per direct labor-hour. The production budget calls for producing 3,800 units in June and 4,300 units in July.

Required:

Construct the direct labor budget for the next two months, assuming that the direct labor work force is fully adjusted to the total direct labor-hours needed each month. (Round your answers to 2 decimal places.)

	June	July
Required production in units
Direct labor-hours per unit
Total direct labor-hours needed
Direct labor cost per hour
Total direct labor cost