1, Mighty Safe Fire Alarm is currently buying 60,000 motherboards from MotherBoard, Inc., at a price of $67 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $28 per unit; direct labor, $10 per unit; and variable factory overhead, $16 per unit. Fixed costs for the plant would increase by $79,000. Which option should be selected and why?

a.make, $700,800 increase in profits

b.buy, $79,000 increase in profits

2, Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.

	Activity Cost		Activity Base
Procurement	$326,900		Number of purchase orders
Scheduling	246,100		Number of production orders
Materials handling	487,200		Number of moves
Product development	702,100		Number of engineering changes
Production	1,599,300		Machine hours

	Number of Purchase Orders	Number of Production Orders	Number of Moves	Number of Engineering Changes	Machine Hours	Number of Units
Disk drives	3,850	430	1,360	10	2,200	2,100
Tape drives	2,200	235	710	8	8,000	4,300
Wire drives	11,000	760	4,300	30	11,700	3,000

The activity-based cost for each disk drive unit is

a.$654.75

b.$194.96

c.$266.2

d.$19.17

c.make, $780,000 increase in profits

d.buy, $700,800 increase in profits

3, Selected accounts with amounts omitted are as follows

Work in Process
Aug. 1	Balance	276,160	Aug. 31	Goods finished	166,250
31	Direct materials	X
31	Direct labor	34,400
31	Factory overhead	X

Factory Overhead
Aug. 1 31	Costs incurred	116,560	Aug. 1	Balance	14,960
			31	Applied
				(30% of direct labor cost)	X

If the balance of Work in Process on August 31 is $214,630, what was the amount debited to Work in Process for direct materials in August?

a.$525,190

b.$60,000

c.$358,940

d.$95,930

4, Woodpecker Co. has $294,000 in accounts receivable on January 1. Budgeted sales for January are $938,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining 80% of sales on account, 75% are expected to be collected in the month of sale and the remainder the following month. The January cash collections from sales are

a.$1,044,400

b.$626,640

c.$835,520

d.$1,338,400

5, Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.

	Activity Cost		Activity Base
Procurement	$381,200		Number of purchase orders
Scheduling	233,200		Number of production orders
Materials handling	496,100		Number of moves
Product development	732,200		Number of engineering changes
Production	1,494,900		Machine hours

	Number of Purchase Orders	Number of Production Orders	Number of Moves	Number of Engineering Changes	Machine Hours	Number of Units
Disk drives	4,180	340	1,380	11	2,300	1,800
Tape drives	2,200	195	760	6	9,000	4,200
Wire drives	11,700	770	4,300	29	10,100	2,700

The activity rate for the production cost pool is

a.$21.08 per machine hour

b.$69.86 per machine hour

c.$77.03 per machine hour

d.$146.89 per machine hour

6, The standard costs and actual costs for factory overhead for the manufacture of 2,700 units of actual production are as follows:

	Standard Costs
Fixed overhead (based on 10,000 hours)	3 hours per unit at $0.77 per hour
Variable overhead	3 hours per unit at $1.92 per hour
Actual Costs
Total variable cost, $18,000
Total fixed cost, $8,100

The variable factory overhead controllable variance is

a.$0

b.$2,448 favorable

c.$2,448 unfavorable

d.$1,958 favorable

7, A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $356,100 and direct labor hours would be 44,500. Actual manufacturing overhead costs incurred were $309,800, and actual direct labor hours were 53,700. What is the predetermined overhead rate per direct labor hour?

a.$12.00

b.$9.60

c.$6.40

d.$8.00

8, Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $694,590, using 411,000 direct labor hours. The factory overhead budget for the Assembly Department is $668,306, using 81,700 direct labor hours.

If a table lamp requires 2 hours of fabrication and 5 hour of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of table lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is

a.$116.77

b.$8.18

c.$16.68

d.$44.28

9, he debits to Work in ProcessAssembly Department for April, together with data concerning production, are as follows:

April 1, work in process:
Materials cost, 3,000 units	$8,000
Conversion costs, 3,000 units, 80% completed	5,600
Materials added during April, 10,000 units	25,400
Conversion costs during April	31,300
Goods finished during April, 11,500 units
April 30, work in process, 1,500 units, 60% completed

All direct materials are placed in process at the beginning of the process, and the weighted average method is used to cost inventories.

The conversion cost per equivalent unit (to the nearest cent) for April is

a.$2.98

b.$3.69

c.$3.21

d.$2.84

10, Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours.

	Overhead		Direct Labor Hours (dlh)			Product
						A		B
Painting Dept.	$238,700		11,600	dlh		16	dlh	3	dlh
Finishing Dept.	78,200		9,300			3		15
Totals	$316,900		20,900	dlh		19	dlh	18	dlh

The factory overhead allocated per unit of Product B in the Painting Department if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is

a.$25.23 per unit

b.$20.58 per unit

c.$61.74 per unit

d.$45.49 per unit