1A) Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.

Activity	Cost			Cost Driver
Material handling	$	269,000		Number of parts
Material insertion		3,390,000		Number of parts
Automated machinery		872,000		Machine hours
Finishing		256,000		Direct labor hours
Packaging		256,000		Orders shipped
Total	$	5,043,000

The following information pertains to the three product lines for next year:

	Economy				Standard				Deluxe
Units to be produced		10,000				4,100				2,550
Orders to be shipped		1,720				710				200
Number of parts per unit		10				15				25
Machine hours per unit		1				3				6
Labor hours per unit		3				3				3

What is Barnetts pool rate for the automated machinery activity?

1. $23.19
2. $23.69
3. $50.42
4. $56
5. None of the answers is correct

1B) Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.

Activity	Cost			Cost Driver
Material handling	$	276,000		Number of parts
Material insertion		3,110,000		Number of parts
Automated machinery		882,000		Machine hours
Finishing		252,000		Direct labor hours
Packaging		252,000		Orders shipped
Total	$	4,772,000

The following information pertains to the three product lines for next year:

	Economy				Standard				Deluxe
Units to be produced		16,500				8,000				2,600
Orders to be shipped		1,730				570				230
Number of parts per unit		15				20				25
Machine hours per unit		1				2				6
Labor hours per unit		3				3				3

What is Barnetts pool rate for the packaging activity?

1. $2.96 per machine hour
2. $3.10 per labor hour
3. $9 .96 per unit
4. $99.60 per order shipped
5. None of the answers is correct

1C) Dane Company has a break-even point of 85,000 units. If the firm's sole product sells for $35 and fixed costs total $425,000, the variable cost per unit must be:

1. $30
2. An amount other than $10, $30, $38, but one that can be derived based on the information presented
3. An amount that cannot be derived based on the information presented
4. $38
5. $10

1D) A company has fixed costs of $700 and a per-unit contribution margin of $6. Which of the following statements is true?

1. Each unit contributes $6 toward covering the fixed costs of $700
2. The situation described is not possible and there must be an error
3. Once the break-even point is reached the company will increase income at the rate of $6 per unit
4. The firm will definitely lose money in this situation
5. Each unit contributes $6 toward covering the fixed costs of $700 and once the break-even point is reached the company will increase income at the rate of $6 per unit