1.Scott Tools produces a variety of scissors and other cutting instruments at its Statesboro manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The company expects to produce 22,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below:

ACTIVITIES:	UNIT	BATCH	PRODUCT	FACILITY
	LEVEL	LEVEL	LEVEL	LEVEL
Cost	$39,000	?	$15,000	$176,000
Cost Driver	3,000 labor hrs	200 set ups	% of use	22,000 units

Production of 1,000 units of a pipe-cutting tool required 600 labor hours, 20 setups, and consumed 25 % of the product sustaining activities and resulted in an overhead allocation of $22,450. What amount of batch-level overhead costs was expected during the period? (Do not round intermediate calculations.)

$2,900$29,000$19,550None of these answers is correct.

2.

ServicePro provides two kinds of services. During the most recent accounting period, the two service lines produced the following operating results:

	Service 1	Service 2
Service revenue	$165,000	$72,000
Unit-level materials	($37,000)	($19,000)
Unit-level labor	($47,000)	($31,000)
Product-level selling & administrative costs	($27,000)	($20,500)
Company wide facility-level costs	($6,000)	($6,000)
Net income	$48,000	($4,500)

If the company stops providing Service 2:

The company's income will decrease by $1,500 per year.The company's income will increase by $1,500 per year.The company's income will increase by $2,500 per year.The company's income will decrease by $2,500 per year.

3.

Centennial Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below:

	Tour A	Tour B
Projected revenue	$8,000	$10,000
Variable costs	2,000	6,000
Fixed costs	3,000	3,000
Profit	$ 3,000	$ 1,000

What are the incremental (differential) costs of Tour B?

$3,000$2,000

None of these.

$4,000

4.

Great Products Company currently outsources a relay switch that is a component in one of its products. The switches cost $36 each. The company is considering making the switches internally at the following projected annual production costs:

Unit-level material cost	$5
Unit-level labor cost	$4
Unit-level overhead	$3
Batch-level set-up cost (5,000 units per batch)	$47,000
Product-level supervisory salaries	$48,500
Allocated facility-level costs	$42,000

The company expects an annual need for 5,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,700 a month. If the company decides to make the parts, total costs will be:

$42,000 less than if the switches are purchased.$19,900 more than if the switches are purchased.$28,600 less than if the switches are purchased.$61,900 more than if the switches are purchased.