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Subwaste Company has two support departments, Accounting and Information Systems. The Information Systems Department costs of $80,000 are allocated on the basis of standard service hours used. The Accounting Department costs of $20,000 are allocated based on the number of employees. Costs of Production Departments A and B are $40,000 and $60,000, respectively. Data on standard service hours and number of employees are as follows: Information Systems Dept. 200 10 Accounting Dept. 200 20 Production Dept. A 240 45 Production Dept. B 160 105 Standard service hours used Number of employees How much of the cost of the Accounting Department is allocated to Department A using the direct method? O A. $4,211 B. $5,000 O C. $6,000 D. $12,632 E. $40,000 Leaked Mug Ltd. sells two products: mugs and cups. The expected sales for mugs were 1,500 units; 2,000 were sold. The budgeted selling price for mugs was $15.00; however, the actual selling price was $13.00. The expected sales for cups were 4,600 units; 5,000 were sold. The budgeted selling price for cups was $7.50; however, the actual selling price was $9.00. Budgeted and actual variable costs were $12.60 per unit for the mugs and $5.00 per unit for the cups. What is the contribution margin sales - volume variance for the period? A. $7,700 favourable B. $2,200 favourable O c. $7,700 unfavourable D. $2,200 unfavourable E. $4,500 favourable Crash & Burn Ltd. manufactures downhill skis. For April there were no beginning inventories of direct materials, and no beginning or ending work-in-process. Journal entries are recorded when materials are purchased and when finished goods are sold under backflush costing. The standard costs per unit are: direct materials $25, conversion costs $10. Following is financial information for April. Actual Conversion costs Direct materials purchased Units produced Units sold Which of the following journal entries properly records the purchase of direct materials at Crash & Burn Ltd.? $320,000 $240,000 9,900 9,100 A. 240,000 Accounts Payable Control Inventory: Raw and in Process Control 240,000 B. 240,000 240,000 240,000 240,000 Inventory: Raw and in Process Control Conversion Costs OC. Inventory: Raw and in Process Control Accounts Payable Control OD. Conversion Costs Accounts Payable Control O E. Inventory Control Accounts Payable Control 240,000 240,000 240,000 240,000 Burnt Company currently sells toaster ovens for $180. It has costs of $140. A competitor is bringing a new toaster oven to market that will sell for $150. Management believes it must lower the price to $150 to compete in the market for toaster ovens. Marketing believes that the new price will cause sales to increase by 12%, even with a new competitor in the market. Burnt's sales are currently 100,000 toaster ovens per year. What is the target cost if the company wants to maintain its same income level, and marketing is correct (rounded to the nearest cent)? A. $135.00 B. $113.64 C. $123.34 D. $114.29 O E. $140.00
