Alvarez Company makes three joint products, products A, B, and C. For each batch, the materials cost is $16,000, direct labor cost is $4,000, and manufacturing overhead is $10,000. From each batch, the company makes 2,000 pounds of A, 1,200 pounds of B, and 800 pounds of C.

Required:

a) What are the total joint costs for each batch of the products?

b) Allocate the joint costs to each of the three products.

c) Determine the cost per pound for product A.

Dallas Company's maintenance department has 10 employees and provides maintenance services to the human resources department and to the company's three operating departments. Human resource department costs are allocated to the three operating departments.The assembly department has 75 employees; the finishing department has 15 employees; and the sales department has 10 employees. The service department to which maintenance services are provided is the human resources department, which has 15 employees. The service department costs are allocated using the step method and based on the number of employees.The total amount of costs for the maintenance department and human resource department are $100,000 and $150,000, respectively.

Required:

Determine the amount of maintenance cost that should be allocated to each department.

Rachel Robinson owns a small retail store in Cairo, Georgia. The following summary information regarding expectations for the month of January is provided: As of December 31, there is $1,000 in the bank and the balance in accounts receivable is $5,000. Budgeted cash and credit sales for January are $6,000 and $4,000, respectively. Ninety percent of credit sales are collected in the month of sale, and the remainder is collected in the following month. Rachel's suppliers do not extend credit. Cash payments for January are expected to be $24,000. Rachel has a line of credit that enables the store to borrow funds on demand. However, funds must be borrowed on the first day of the month and interest paid in cash on the last day of the month. Rachel's bank charges annual interest of 12% per year. Rachel desires a minimum $1,000 cash balance at the end of each month.

Required:

a) Compute the amount of funds that needs to be borrowed.

b) Compute the amount of interest expense that will appear on the January 31 pro forma income statement.

Short Answer:

1. The assumptions underlying cost-volume-profit analysis seldom are entirely valid. How does that affect the usefulness of the technique?

2. Illustrate

33) Gordon Company is considering a three-year capital investment that will return $150,000 per year. The present value of this annuity at the company's required rate of return of 12% is $360,275. 6' (.l Required:6' (_| Complete the table that has been started below to show the return on investment at 12% and the amount of investment recovered each year. Remember that the investment balance should be zero at the end of the three years. (Round to the nearest whole dollar.) 6' (.l (J ml 6 b