22.Fence Industries is preparing its annual profit plan. As part of its analysis of the profitability of its customers, management estimates that the $12,000 for sales support should be assigned to the individual customers from the information given as follows:

	Customer A	Customer B
Units purchased	100,000	200,000
Purchase orders (annual)	5	20

What is the amount of the sales support costs that should be allocated to Customer A, assuming Fence uses purchases orders to compute activity-based costs?

a.) $2,400.

b.) $4,000.

c.) $8,000.

d.) $9,600.

23.Republic Industries decides to price delivery service according to the results of a recent activity-based costing (ABC) study. The study indicates Republic should charge $8 per order, 2% of the order's value for general delivery costs, $1.25 per item, and $30 for delivery.

A year later, Republic collected the following information for two of its best customers:

Cost driver	Customer C				Customer D
Number of orders		18				8
Number of deliveries		10				10
Number of items		2,000				4,000
Order value	$	120,000			$	80,000

What are the total delivery costs charged to Customer C during the year?

a.) $5,344.

b.) $5,364.

c.) $6,900.

d.)$6,964.

24.Express Travel decides to price delivery service according to the results of a recent activity-based costing (ABC) study. The study indicates Express Travel should charge $16 per order, 1% of the order's value for general delivery costs, $2.50 per item, and $45 for delivery.

A year later, Express Travel collected the following information for three of its customers:

Cost driver	Customer A				Customer B				Customer C
Number of orders		18				8				12
Number of deliveries		10				10				24
Number of items		2,000				4,000				12,000
Order value	$	120,000			$	80,000			$	100,000

What are the total delivery costs charged to Customer C during the year?

a.) $16,863.

b.) $20,000.

c.) $31,272.

d.) $32,272.

25. The Tori Company had budgeted production for the year as follows:

Quarter	1	2	3	4
Production in units	10,000	12,000	16,000	14,000

Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 lbs. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials. Budgeted purchases of raw materials in the third quarter would be (in lbs.):

a.) 63,200 lbs.

b.) 62,400 lbs.

c.) 56,800 lbs.

d.) 50,400 lbs.

26. Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $14,000. Budgeted cash receipts total $127,000 and budgeted cash disbursements total $126,000. The desired ending cash balance is $40,000. To attain its desired ending cash balance for December, the company needs to borrow:

a.) $25,000.

b.) $0.

c.) $55,000.

d.) $40,000.

27. The Express Company is preparing its cash budget for the month of June. The following information is available concerning its inventories:

Inventories at beginning of June	$	67,500
Estimated purchases of June		330,000
Estimated cost of goods sold for June		337,500
Estimated payments in June for purchases in May		56,250
Estimated payments in June for purchases prior to May		15,000
Estimated payments in June for purchases in June		80	%

What are the estimated cash disbursements for inventories in June?

a.) $264,000.

b.) $320,250.

c.) $335,250.

d.) $341,250.

28. TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.

	Standard					Standard			Standard
	Quantity					Price			Cost
Direct Materials		8	pounds			$	1.80	per pound		$	14.40
Direct Labor		.25	hour			$	8.00	per hour			2.00
										$	16.40

During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

Is the direct labor price (rate) variance favorable or unfavorable?

a.) Favorable.

b.) Unfavorable.

29.

Actual machine hours		840
Standard machine hours allowed		900
Denominator activity (machine hours)		1,000
Actual fixed overhead costs	$	3,800
Budgeted fixed overhead costs	$	4,000
Predetermined overhead rate ($1 variable + $4 fixed)	$	5

Is the fixed overhead spending (budget) variance favorable or unfavorable?

a.) Favorable.

b.) Unfavorable.