1. Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $3.30 and total fixed costs are $10,000. The cat food can be sold as it is for $8.65 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,500 cost. The additional processing will yield 10,000 bags of Premium Green and 3,500 bags of Green Deluxe, which can be sold for $7.65 and $5.65 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total gross profit would be:

2. Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.90; direct labor, $14.90, variable overhead $3.90 and fixed overhead, $8.90. An outside supplier has offered to sell the product to Paxton for $38.60. Compute the net incremental cost or savings of buying the component.

3. Ahngram Corp. has 1,000 defective units of a product that cost $3.50 per unit in direct costs and $7.00 per unit in indirect cost when produced last year. The units can be sold as scrap for $4.50 per unit or reworked at an additional cost of $2.90 and sold at full price of $13.50. The incremental net income (loss) from the choice of reworking the units would be:

4.

A lumber mill bought a shipment of logs for $30,000. When cut, the logs produced 750,000 board feet of lumber in the following grades.

Type 1 - 240,000 bd. ft. priced to sell at $.16 per bd. ft.

Type 2 - 340,000 bd. ft. priced to sell at $.16 per bd. ft.

Type 3 - 170,000 bd. ft. priced to sell at $.16 per bd. ft.

Compute the cost to be allocated to Type 1 and Type 2 lumber, respectively, if the value basis is used. (Do not round your intermediate calculations.)

5. Western Company is preparing a cash budget for June. The company has $10,500 cash at the beginning of June and anticipates $31,500 in cash receipts and $37,500 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:

6. Milltown Company specializes in selling used cars. During the month, the dealership sold 24 cars at an average price of $15,200 each. The budget for the month was to sell 22 cars at an average price of $16,200. Compute the dealership's sales price variance for the month.

7. Coombs Fashions forecasts sales of $135,000 for the quarter ended December 31. Its gross profit rate is 30% of sales, and its September 30 inventory is $37,500. If the December 31 inventory is targeted at $46,500, budgeted purchases for the fourth quarter should be:

8. A company pays $40,000 per period to rent a small building that has 12,500 square feet of space. This cost is allocated to the company's three departments on the basis of the amount of the space occupied by each. Department One occupies 2,500 square feet of floor space, Department Two occupies 3,750 square feet of floor space, and Department Three occupies 6,250 square feet of floor space. If the rent is allocated based on the total square footage of the space, Department One should be charged rent expense for the period of:

9. If budgeted beginning inventory is $8,750, budgeted ending inventory is $9,940, and budgeted cost of goods sold is $10,710, budgeted purchases should be: