16- Wren Pork Company uses the value basis of allocating joint costs in its production of pork products. Relevant information for the current period follows:

Product		Pounds		Price/lb.
Loin chops		3,000		$	5.00
Ground		10,000			2.00
Ribs		4,000			4.75
Bacon		6,000			3.50

The total joint cost for the current period was $43,000. How much of this cost should Wren Pork allocate to Loin chops?

Multiple Choice

• $0.

• $5,909.

• $8,600.

• $10,750.

• $43,000.

18- Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:

Office Expenses	Total				Allocation Basis
Salaries	$	30,000			Number of employees
Depreciation		20,000			Cost of goods sold
Advertising		40,000			Net sales

Item	Drilling				Grinding				Total
Number of employees		1,000				1,500				2,500
Net sales	$	325,000			$	475,000			$	800,000
Cost of goods sold	$	75,000			$	125,000			$	200,000

2-

iSooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero salvage value. The market value of the spotter truck is currently $32,000. iSooky can purchase a new spotter truck for $120,000 and receive $31,000 in return for trading in its old spotter truck. The new spotter truck will reduce variable manufacturing costs by $25,000 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck (ignoring the time value of money) is:

Multiple Choice

• $31,000 decrease

• $36,000 decrease

• $31,000 increase

• $120,000 decrease

• $36,000 decrease

• $36,000 increase

• $120,000 decrease

• $36,000 increase

  5 - Hordel Company needs to determine a markup for a new product. Hordel expects to sell 5,000 units and wants a target profit of $82 per unit. Additional information is as follows:

  Variable product cost per unit	$	79
  Variable administrative cost per unit		21
  Total fixed overhead		42,000
  Total fixed administrative		31,000

  Using the variable cost method, what markup percentage to variable cost should be used?

  Multiple Choice

• 80.1%

• 98.20%

• 94.1%

• 91.7%

• 96.6%

• 7 - Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 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 $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. If Bluebird accepts this additional business, the effect on net income will be:

  Multiple Choice

• $45,000 increase.

• $11,250 increase.

• $33,750 increase.

• $7,500 decrease.

• $33,750 decrease.

  9 - Carns Company is considering eliminating its small tools division, which reported an operating loss for the recent year of $85,000. Division sales for the year were $1,310,000 and its variable costs were $1,175,000. The fixed costs of the division were $220,000. If the kitchen division is dropped, 45% of the fixed costs allocated it could be eliminated. The impact on Carnss operating income from eliminating the small tools division would be:

  Multiple Choice

• $74,200 decrease

• $36,000 decrease

• $220,000 decrease

• $36,000 increase

• $99,000 decrease