Q1:

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:

Standard Costs
Fixed overhead (based on 10,000 hours)	3 hours per unit @ $0.72 per hour
Variable overhead	3 hours per unit @ $1.94 per hour
Actual Costs
Total variable cost, $18,200
Total fixed cost, $8,000

The amount of the variable factory overhead controllable variance is

$3,650 favorable

$3,650 unfavorable

$0

$2,920 favorable

Q2:

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:

	Rails Division	Locomotive Division	Corporate Total
Cost of goods sold	$46,600	$31,000
Direct operating expenses	26,200	21,400
Sales	97,900	67,800
Interest expense			$2,100
General overhead			19,300
Income tax			4,300

The net income for Train Corporation is

$74,300

$40,500

$88,100

$14,800

Q3:

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

How much service department cost will be allocated to the Micro Division?

a.$145,000

b.$60,000

c.$200,000

d.$345,000

Q4:

The Nelson Company's radio division currently is purchasing transistors from the Charlotte Co. for $3.50 each. The total number of transistors needed is 8,000 per month. Nelson Company's electronics division can produce the transistors for a cost of $4.00 each and they have plenty of capacity to manufacture the units. The $4 is made up of $3.25 in variable costs, and $0.75 in allocated fixed costs. What should be the range of a possible transfer price?

$3.26 to $3.49

$3.51 to $3.99

$3.25 to $3.50

$3.26 to $3.99