Question
1. The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and
1. The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage.
Purchasing | Maintenance | Fabrication | Assembly | |||||||||||||
Operating costs | $ | 44,000 | $ | 25,200 | $ | 108,000 | $ | 74,000 | ||||||||
No. of purchase orders | 16 | 4 | ||||||||||||||
Sq. ft. of space | 3,900 | 2,100 | ||||||||||||||
Required: Compute the amount of Purchasing department expense to be allocated to Assembly
2. Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $2.80 per unit. Bluebird currently produces and sells 75,000 units at $6.80 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesalers name and would not affect Bluebirds sales through its normal channels. Production costs for these units are $3.60 per unit, which includes $2.15 variable cost and $1.45 fixed cost. If Bluebird accepts this additional business, the effect on net income will be:
3. Carns Company is considering eliminating its small tools division, which reported an operating loss for the recent year of $97,000. Division sales for the year were $1,430,000 and its variable costs were $1,295,000. The fixed costs of the division were $340,000. If the small tools division is dropped, 35% of the fixed costs allocated it could be eliminated. The impact on Carnss operating income from eliminating the small tools division would be:
4. Which column (i) and row (n) would you use from a present value or future value table for 12% interest compounded quarterly for 6 years?
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