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2. (28 points) Indifference Point FastQ Company, a specialist in printing, has established 500 convenience copying centers throughout the country. In order to upgrade its services, the company is considering two new models of laser copying machines for use in producing high-quality copies. These high-quality copies would be added to the growing list of products offered in the FastQ shops. The selling price to the customer for each laser copy would be the same, no matter which machine is installed in the shop. The two models of laser copying machines under consideration are 10245 (a small-volume model) and 1024M (a medium-volume model). The annual rental costs and the variable operating costs vary with the size of the machine. The machine capacities and costs are shown below: Copier Model 10248 1024M 1 nnual capacity (copies) 100,000 osts: ariable costs per unit: ost of paper ariable operating costs a} Determine the volume level in copies at which FastQ Company would be indifferent between acquiring either the small-volume model (10245] or the medium-volume model (1024M). Put your answer in the space provided and show and label your computations. b) Draw a PV graph (NOT a CVP graph!) for the 10245 and 1024M models. Carefully label it as we did in class. Write down the values where all lines intersect an axis. c} Which copier is better for establishments that are likely to sell 80,000 copies per yea r? Why? 3. (22 points) Job Costing The following data have been taken from the accounting records of Rayburn Corporation for the current year. Assume all raw materials are direct materials. Sales $1,980 DM used = Selling expenses 280 Factory overhead allocated 460 Direct labor 400 Administrative expenses 300 CGM = Purchases of direct materials 240 Finished goods inventory, beginning 240 Finished goods inventory, ending 320 CGS = Materials inventory, beginning 80 Materials inventory, ending 140 Work in process inventory, beginning 140 Work in process inventory, ending 100 Net income for the year: Use t-accounts to compute (a) the cost of direct materials used (b) the cost of goods manufactured and (c) the cost of goods sold. Show your work below and write your answers in the spaces provided above. Also compute (d) net income for the year and place your answer in the boxes above.4. l8 pointsl Cost Behavior Match the graphs below to the correct description of costs. Use each graph only once. Cost descriptions 1. Total property taxes are $5,000 unless you hire more than 50 people, in which case the city will not charge any property tax. Supervisor salaries are $50,000 for 0-1,000 units and $70,000 for over 1,000 units. A consultant charges $100/hour for a project but capped his fees at $100,000. The rent on the office building is $10,000. Salespersons earn $30,000/year plus a 4% commission on sales. 2 3 4 5. Direct labor costs $22 per hour including benefits. 6 7 Materials cost $131gallon for under 1,000 gallons and $11/gallon for over 1,000 gallons. 8 The rent on the store is $3,000/month plus 2% of sales exceeding $20,000 in a month. 5. (24 points) Blackwelder Co. manufactures a variety of razors used by both men and women. The company's plant is partially automated. The company uses an activity-based cost system. Listed below is cost driver information used in the product-costing system: Budgeted Budgeted Level of the Overhead Cost pool Overhead Cost Cost Driver Cost Driver Grinding machine depreciation $227,500 25,000 Grinding machine hours Polishing machine depreciation 154,940 25,400 Polishing machine hours Product design 665,720 35,600 Hours in design Material purchasing/storing 1,293,760 124,400 Lbs of raw materials Two current product orders had the following requirements: Men's Razors Women's Razor Overhead assigned to the order for Units produced and sold 26,000 30,000 men's razors. Direct labor hours 50 40 Pounds of raw materials 980 1,120 Hours in design 32 38 Grinding machine hours 85 60 Overhead assigned to the order for Polishing machine hours 82 63 women's razors. Determine the amount of overhead assigned to each order. Put your answers in the boxes above and show and label your computations below