1.Denny Inc. produces a single product. In doing so, the company incurs overhead costs as follows:

Indirect Factory Wages	$ 200,000
Factory Utilities	$80,000
Factory Depreciation	$90,000

The company uses an activity-based costing system which compiles costs into 3 cost pools, machining, milling and assembly. The costs allocated to these activity cost pools break down as follows:

Cost	Machining	Milling	Assembly
Indirect Factory Wages	55%	35%	10%
Factory utilities	45%	45%	10%
Factory Depreciation	15%	80%	5%

The budgeted total cost of the Assembly activity is:

A. 120,000

B. 32,500

C. 29,000

D. 200,000

2.

Bob Inc. has commenced work on three jobs during its first year of operations. Costs incurred for each of these jobs are as follows:

	Job 1	Job 2	Job 3
Direct Materials	$ 110,000	160,000	220,000
Direct Labour	$ 180,000	220,000	370,000

Overhead is applied to jobs at a rate of $0.20 per direct labour dollar spent. Actual manufacturing overhead costs incurred amounted to $180,000. Bob Inc's overhead costs for the year were:

A. $32,000 under applied

B. $65,000 over applied

C. $26,000 under applied

D. $22,000 over applied

3.

Bob Inc. has commenced work on three jobs during its first year of operations. Costs incurred for each of these jobs are as follows:

	Job 1	Job 2	Job 3
Direct Materials	$ 110,000	160,000	220,000
Direct Labour	$ 180,000	220,000	370,000

Overhead is applied to jobs at a rate of $0.20 per direct labour dollar spent. Actual manufacturing overhead costs incurred amounted to $180,000.

To dispose of any over or under-applied overhead, Bob Inc must:

A. Debit Cost of Goods Sold by $26,000

B. Credit Cost of Goods Sold by $32,000

C. Credit Cost of Goods Sold by $22,000

D. Debit Cost of Goods Sold by $65,000

4.Day Enterprises sells a single product for $37 per unit. Direct materials costs were $9 per unit, while direct labour and variable manufacturing overhead costs were $8 and $3 respectively. Fixed manufacturing overhead costs amount $24,000 per month. Variable selling costs are $5 per unit. Fixed selling costs are $9,000 per month. Last month, the company produced 10,000 units and sold 6,000 units. What is the company's operating income using absorption costing?

A. $52,600

B. $39,000

C. $48,600

D. $45,400