A)

The following is a partially completed lower section of a departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for the four departments. Purchasing department expenses are allocated to the operating departments on the basis of purchase orders. Maintenance department expenses are allocated based on square footage. Compute the amount of Purchasing department expense to be allocated to Fabrication.

Department	Direct Expenses	Number Purchase Orders	Square Feet
Purchasing	$ 32,000
Maintenance	18,000
Fabrication	96,000	16	3,300
Assembly	62,000	4	2,700

B)

A company produced 200 units of Product L and 150 units of Product M during the current period and incurred joint costs of $660. Product L sells for $8 per unit and Product M sells for $16 per unit. Compute the cost to be allocated to Product M for this periods joint costs if the value basis is used.

Multiple Choice

• $264.

• $396.

• $330.

• $1,364.

• $796.

C)

Sooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero-salvage value. iSooky can purchase a new spotter truck for $120,000 and receive $31,000 in return for trading in its old spotter truck. The old spotter truck has variable manufacturing costs of $75,000 per year. The new spotter truck will reduce variable manufacturing costs by $25,000 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck is:

Multiple Choice

• $31,000 decrease

• $31,000 increase

• $36,000 decrease

• $120,000 decrease

• $36,000 increase