Frannie's Florist produces floral bouquets for commercial businesses (i.e. hotels) and uses an activity-based costing system. Data concerning overhead costs and activity pools is as follows: Activity Cost Pool: Bouquets - Estimated Wages $48,000 and Estimated Materials $18,000 Activity Cost Pool: Deliveries - Estimated Wages $24,000 and Estimated Materials $10,000 Activity Cost Pool: Other - Estimated Wages $8,000 and Estimated Materials $12,000 Total Estimated Wages were $80,000 and Total Estimated Materials were $40,000 During the year Frannie made 60,000 bouquets and made 5,000 deliveries. Using activity-based costing, what is the cost per delivery? Answer

4 points

Question 2

1. The Starbright Company makes alarm clocks. Information on the product is as follows:

   Clock Sales $180,000 Clock Direct Materials $60,000 Clock Direct Labor $20,000

   Overhead costs are allocated at the rate of 120% of material costs. Company profits are?

   Answer

4 points

Question 3

1. HN Inc. produces and sells 40,000 units of a single product, eye drops. Variable costs total $80,000 and fixed costs total $120,000. If each unit is sold for $8, what markup percentage is the company using?

   Answer

   		160%
   		133%
   		60%
   		75%

4 points

Question 4

1. The Jefferson Supply Company experienced the following costs in 2007: Direct materials $3.50/unit Direct labor $2.65/unit Variable Manufacturing Overhead Costs $1.50/unit Fixed Manufacturing Overhead Costs $20,000 Variable selling costs $2.15/unit Fixed selling costs $8,000 Fixed administrative costs $7,000 During the year the company manufactured and sold 85,000 units. If the average selling price per unit was $19.50 what was the company's contribution margin?

   Answer

   		$1,007,250
   		$824,500
   		$987,250
   		$789,500

4 points

Question 5

1. Two or more products which result from common inputs are called joint products?

   Answer True False

3 points

Question 6

1. When service department's fixed costs are allocated using actual costs and actual usage, the charge one production operating manager receives will depend on the usage of other production operating managers. True or False?

   Answer True False

3 points

Question 7

1. The purpose of incremental analysis is to find the alternative?

   Answer

   		with the fewest relevant costs.
   		with the lowest fixed costs.
   		that contributes the most to operating income.
   		that brings in the most revenue.

4 points

Question 8

1. What is the basic premise of target costing?

   Answer

   		Customers are generally willing to pay for whatever companies design, so cost should not be a factor in the design process.
   		Products should be designed to meet customer needs at a price customers are willing to pay that allows the company to make a reasonable profit.
   		Products should be designed to include as many features as possible.
   		Products should be designed based on what features are technologically possible, and then marketed to customers at a price that covers the costs of design.

4 points

Question 9

1. The allocation of joint costs to joint products influences?

   Answer

   		overall profitability of the company
   		all of these choices
   		the decision to sell or process further the joint products
   		product line profitability for the joint products

4 points

Question 10

1. Krusty, Co. uses a capital intensive production process and allocates maintenance costs to the three producing departments. The maintenance cost for April was $100,000. The three departments had the following usage for April:

   Krusty Burger Department used 500 Machine Hours and 2,000 Direct Labor Hours Ribwich Department used 800 Machine Hours and 5,000 Direct Labor Hours Salad on a Stick Department used 700 Machine Hours and 3,000 Direct Labor Hours

   The maintenance cost that should be allocated to the Ribwich Department for April should be?

   Answer

4 points

Question 11

1. Economic theory says to set the price that will?

   Answer

   		all of these choices
   		allow you to maximize profits
   		allow you to maximize the number of units sold
   		allow you to maximize revenues

4 points

Question 12

1. SM Press Company manufactures books. The company is trying to decide whether to print the individual pages in-house (the current practice) or have a printing company perform this task. The salary of the accounting manager at SM Press Company is relevant to this decision?

   Answer True False

3 points

Question 13

1. A company is trying to decide whether to keep or drop the sporting goods department in its department store. If the segment is dropped, the sporting goods manager will be fired. The manager's salary, in relation to the decision to keep or drop the sporting goods department, is?

   Answer

   		sunk and therefore not relevant
   		not avoidable and therefore relevant
   		avoidable and therefore relevant
   		the same for all alternatives and therefore not relevant

4 points

Question 14

1. Which of the following is not a reason that companies allocate costs?

   Answer

   		to calculate the full cost of products for financial reporting purposes
   		to provide information needed by managers to make appropriate decisions
   		to discourage managers from using external suppliers
   		to reduce the frivolous use of company resources

4 points

Question 15

1. SM Press Company manufactures books. The company is trying to decide whether to print the individual pages in-house (the current practice) or have a printing company perform this task. The quality of goods produced by the printing company is relevant to this decision?

   Answer True False

3 points

Question 16

1. SM Press Company manufactures books. The company is trying to decide whether to print the individual pages in-house (the current practice) or have a printing company perform this task. The original price of the printing equipment owned by SM Press Company is relevant to this decision?

   Answer True False

3 points

Question 17

Which is an example of a qualitative consideration for short-run decision analyses?

Answer

		Employee morale
		The loss of a depreciation shield
		Net cash flows
		The Cost Allocation Death Spiral