ABC Corporation has three service departments with the following costs and activity base:

Service Department	Cost	Activity Base for Allocation
Graphics Production	$200,000	number of copies
Accounting	500,000	number of invoices processed
Personnel Department	400,000	number of employees

ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:

	Micro	Macro	Super
Direct revenues	$700,000	$850,000	$650,000
Direct operating expenses	50,000	70,000	100,000
Number of copies made	20,000	30,000	50,000
Number of invoices processed	700	800	500
Number of employees	130	145	125

What is the service department charge rate for the Personnel Department?

		$3,077
		$3,200
		$2,758
		$1,000

2 points

QUESTION 20

The rates at which centralized services are charged to each division are called service department charge rates.

True

False

2 points

QUESTION 21

If in evaluating a proposal by use of the net present value method there is an excess of the present value of future cash inflows over the amount to be invested, the rate of return on the proposal is less than the rate used in the analysis.

True

False

2 points

QUESTION 22

The method of analyzing capital investment proposals that divides the estimated average annual income by the average investment is

		net present value method
		average rate of return method
		cash payback method
		internal rate of return method

2 points

QUESTION 23

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates only to one customer's lean cell for the coming year. Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units.

From the foregoing information, determine the budgeted cell conversion cost per unit.

		$268.00
		$240.00
		$1,842.50
		$296.00

2 points

QUESTION 24

Under the lean production concept, employees are better utilized if they are experts in one operation rather than wasting time training them to learn various production operations.

True

False