28.

Rocko Inc. has a machine with a book value of $50,000 and a five-year remaining life. A new machine is available at a cost of $85,000 and Rocko can also receive $38,000 for trading in the old machine. The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life. Should the machine be replaced?

Yes, because income will increase by $14,000 per year.

Yes, because income will increase by $23,000 in total.

No, because the company will be $23,000 worse off in total.

No, because the income will decrease by $14,000 per year.

Rocko will be not be better or worse off by replacing the machine.

19.

Riemer, Inc. has four departments. Information about these departments is listed below. Maintenance is a service department. If allocated maintenance cost is based on floor space occupied by each of the other departments, compute the amount of maintenance cost allocated to the Cutting Department. (Do not round your intermediate computations.)

	Maintenance	Cutting	Assembly	Packaging
Direct costs	$23,000	$35,000	$75,000	$50,000
Sq. ft. of space	750	1,250	2,250	2,750
No. of employees	7	2	21	9

$23,000.

$2,519.

$11,500.

$3,724.

$4,600.

1.

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.

Units produced this year	26,000 units
Units sold this year	15,600 units
Direct materials	$10 per unit
Direct labor	$12 per unit
Variable overhead	$78,000 in total
Fixed overhead	$130,000 in total

1.

value: 2.94 points

Required information

Given Advanced Company's data, compute cost per unit of finished goods under variable costing.

$22.00

$27.00

$23.88

$25.00

$30.00

2.

value: 2.94 points

Required information

Given Advanced Company's data, compute cost per unit of finished goods under absorption costing.

$22.00

$35.33

$27.00

$25.00

$30.00