2. Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:

Overhead costs:
Equipment depreciation	$30,000
Supervisory expense	$14,800

Distribution of Resource Consumption Across Activity Cost Pools:
	Activity Cost Pools
	Machining	Order Filling	Other
Equipment depreciation	0.50	0.40	0.10
Supervisory expense	0.50	0.30	0.20

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:
	MHs (Machining)	Orders (Order Filling)
Product I3	5,530	161
Product U8	17,000	964
Total	22,530	1,125

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:
	Product I3	Product U8
Sales (total)	$69,700	$65,700
Direct materials (total)	$31,100	$23,900
Direct labor (total)	$22,400	$29,500

What is the product margin for Product I3 under activity-based costing?(Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

a. $8,373

b. $1,067

c. $12,933

d. $9,153

5. Windham Corporation has current assets of $780,000 and current liabilities of $975,000. Windham Corporation's current ratio would be increased by:

a. the purchase of $480,000 of inventory on account.

b. the collection of $480,000 of accounts receivable.

c. refinancing a $480,000 long-term loan with short-term debt.

d. the payment of $480,000 of accounts payable.

6. Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 12,000 units and of Product B is 10,500 units. There are three activity cost pools, with total cost and total activity as follows:

		Total Activity
Activity Cost Pool	Total Cost	Product A	Product B	Total
Activity 1	$25,420	130	490	620
Activity 2	$38,400	890	310	1,200
Activity 3	$122,670	820	3,410	4,230

The activity-based costing cost per unit of Product A is closest to: (Round your intermediate calculations to 2 decimal places.)

a. $1.60 per units

b. $4.80 per units

c. $3.10 per units

d. $10.79 per units

8. Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company misclassified a portion of direct labor cost as indirect labor. The effect of this misclassification will be to:

a. have no effect on the predetermined overhead rate.

b. overstate the predetermined overhead rate.

c. understate the predetermined overhead rate.

d. cannot be determined from the information given.

12. Sawyer Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 55,000 actual direct labor-hours and incurred $520,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 52,000 direct labor-hours during the year and incur $468,000 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:

a. overapplied by $25,000

b. underapplied by $27,000

c. overapplied by $27,000

d. underapplied by $25,000

22.

Cotuit Company has a current ratio of 3.8 and an acid-test ratio of 3.6. The company's current assets consist of cash, marketable securities, accounts receivable, and inventories. Inventory equals $12,000. Cotuit Company's current liabilities must be:

a. $2,400

b. $60,000

c. $12,000

d. $216,000

25. The property taxes on a factory building would be an example of:

a. Option B

b. Option C

c. Option D

d. Option A