Ch9

6) Two investment centers at Marshman Corporation have the following current-year income and asset data:

	Investment Center A	Investment Center B
Investment center income	$415,000	$525,000
Investment center average invested assets	$2,400,000	$1,950,000

The return on investment (ROI) for Investment Center B is:

371.4%

26.9%

24.1%

39.2%

21.7%

7) Which of the following statements is correct concerning the elements of cycle time?

Move time is the time spent moving (1) raw materials from storage to production and (2) goods in process from one factory location to another factory location.

Inspection time is the time spent producing the product.

Process time is considered non-value-added time.

Wait time is considered value-added time.

Cycle efficiency is the ratio of non-value-added time to total cycle time.

8) Regardless of the system used in departmental cost analysis:

Direct costs are allocated, indirect costs are not.

Indirect costs are allocated, direct costs are not.

Both direct and indirect costs are allocated.

Neither direct nor indirect costs are allocated.

Total departmental costs will always be the same.

9) The following is a partially completed departmental expense allocation spreadsheet for Brickland. It reports the total amounts of direct and indirect expenses for its 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 Maintenance department expense to be allocated to Fabrication.

	Purchasing	Maintenance	Fabrication	Assembly
Operating costs	$32,000	$18,000	$96,000	$62,000
No. of purchase orders			16	4
Sq. ft. of space			3,300	2,700

$6,400.

$9,900.

$8,100.

$9,000.

$25,600.

References

10) Wren Pork Company uses the relative market value method of allocating joint costs in its production of pork products. Relevant information for the current period follows:

Product	Pounds	Price/lb.
Loin chops	3,000	$5.00
Ground	10,000	2.00
Ribs	4,000	4.75
Bacon	6,000	3.50

The total joint cost for the current period was $43,000. How much of this cost should Wren Pork allocate to Loin chops?

$0.

$5,909.

$8,600.

$10,750.

$43,000.