1. X Company began manufacturing operations on January 1. The following information is for the year:

Direct materials purchased

$6,984

Direct materials used

$5,738

Direct labor

$11,634

As of December 31, all jobs were finished, but there were five jobs that were not sold, with costs totalling $1,434. Cost of Goods Sold for the year was $39,466. What was overhead for the year?

2.X Company has the following estimated costs for the year:

Direct materials

$59,300

Direct labor

28,900

Factory supplies

21,500

Factory maintenance

29,200

Advertising

41,400

Factory rent

48,900

Sales salaries

45,000

Factory insurance

67,500

X Company estimates that direct labor hours for the year will be 1,700, and machines will be operated for 60,000 hours. If overhead is allocated on the basis of direct labor hours, what will the overhead rate be?

3. X Company uses an activity-based costing overhead allocation system. It has identified three activities and three cost drivers. The activities and budgeted costs are as follows:

Activity

Budgeted Cost

Setup

$113,000

Product Testing

$55,000

Machine Maintenance

$61,000

The following cost driver information is available for the company's only two products, A and B:

Cost Driver

Product A

Product B

setup hours

28,600

64,100

tests

52,400

44,000

machine hours

66,300

46,200

How much overhead was allocated to Product B? (round overhead rates to two decimal places)?

Questions 4 and 5 refer to the following information:

X Company has two production departments, A and B. At the start of the year, the following budgeted information is available:

Department A

Overhead

$3,800,000

Direct labor hours

50,000

Machine hours

110,000

Department B

Overhead

$1,900,000

Direct labor hours

40,000

Machine hours

140,000

The following information is for two specific jobs, Job 111 and Job 222, that were completed during the year:

Department A

Department B

Job 111

Direct labor hours

741

174

Machine hours

1,080

860

Job 222

Direct labor hours

345

601

Machine hours

1,220

770

4. Using a plantwide allocation system with direct labor hours as the cost driver, what is the allocation to Job 111 (round overhead rates to two decimal places)?

5. Using a departmental allocation system with direct labor hours as the cost driver in Department A and machine hours as the cost driver in Department B, what is the allocation to Job 111 (round overhead rates to two decimal places)?

6. X Company uses account analysis to estimate total overhead costs for each month. In May, when production was 1,000 units, the plant manager classified each overhead cost item as fixed and variable as follows:

Cost Item

Total Cost

Cost Behavior

Supplies

$29,000

100% variable

Utilities

20,000

10% fixed

Maintenance

20,600

100% fixed

If September production is expected to be 1,160 units, what will variable costs per unit be?

7. X Company uses the high-low method to predict maintenance costs each month, with machine hours as the activity measure. The following past monthly cost and activity information is available:

Month

Cost

Machine Hours

May

$7,096

1,600

June

$12,731

3,900

July

$15,548

5,050

August

$12,854

3,950

If maintenance hours in October are expected to be 4,400, what are total fixed maintenance costs expected to be (round unit costs to two decimal places)?

8. In 2017, X Company had revenue of $217,000 and incurred the following costs:

Direct materials

$36,890

Direct labor [all variable]

19,530

Variable overhead

39,060

Fixed overhead

15,100

Variable selling and administration

8,680

Fixed selling and administration

17,100

If revenue and cost relationships are not expected to change in 2018, what must revenue be in order for X Company to earn $60,000?

9. X Company estimates the following for its three products for 2018:

Product

Units Sold

SP

VC

A

7,750

$33.18

$25.40

B

35,650

10.38

5.63

C

21,550

19.77

8.36

Fixed costs in 2018 are expected to be $720,000. What is the expected weighted average contribution margin per unit in 2018?

10. In 2017, X Company's profits after taxes were $174,000. In 2018, the selling price is expected to be $44.20, the variable cost per unit is expected to be $22.50, and total fixed costs are expected to be $170,000. Assuming a tax rate of 33%, how many units must X Company sell in 2018 in order to earn profit of $189,000?

11. X Company is considering modifying one of its main products next year that would make it more attractive to customers. Financial information for the product for this year was as follows:

Selling price

$9.42

Variable costs per unit

$3.40

Total fixed costs

$10,120

If it modified the product, X Company could increase the selling price by $2.14, and unit sales for the modified product would still be the same as current product unit sales. However, fixed costs would increase to $14,580. At what unit sales level would X Company be indifferent between modifying the product and not modifying it?

Questions 12 and 13 refer to the following information:

X Company is considering buying a part next year that they currently make. This year's production costs for 3,400 units were:

Total

Per-Unit

Direct materials

$10,914

$3.21

Direct labor

10,744

3.16

Variable overhead

15,300

4.50

Fixed overhead

14,620

4.30

Total

$51,578

$15.17

A company has offered to supply this part for $13.26 per unit. If X Company buys the part, $7,895 of the fixed overhead can be avoided. Also if X Company buys the part, it can use the freed-up resources to increase production of another product, resulting in additional contribution margin of $2,400. Production next year is expected to be 3,700 units.

12. If X Company buys the part instead of making it, it will save?

13. X Company is uncertain what production will be next year. What production level would make X Company indifferent between making and buying the part?