Question 11 pts

Answer questions 1-3 using the following information:

Betty's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs are allocated on the basis of warehouse-hours. Data Center Department costs are allocated based on the number of computer hours. The costs of departments, warehouse-hours and number of computer hours are as follows:

	Support Departments		Operating Departments
	Warehouse	Data Center	Music	Books
Departmental costs	$ 60,000	$40,000	$60,000	$70,000
Warehouse-hours	-	400	200	400
Computer hours	250	-	375	375

The total cost accumulated in the music department using the direct method is

Group of answer choices

$126,000

$100,000

$104,000

$130,000

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Question 21 pts

The total cost accumulated in the music department using the step-down method is (assume the warehouse department goes first)

Group of answer choices

104,000

$130,000

$126,000

$100,000

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Question 31 pts

The total cost accumulated in the music department using the reciprocal method is

Group of answer choices

$102,222

$122,402

$142,471

$127,778

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Question 41 pts

Value engineering may result in all of the following EXCEPT

Group of answer choices

increases in nonvalue-added costs

improved product design

the evaluation of all business functions within the value chain

changes in materials specifications

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Question 51 pts

Answer questions 5-6 using the following information:

Mickey Corporation has a plant capacity of 100,000 units per month. Unit costs at capacity are:

Direct materials	$4.00
Direct labor	6.00
Variable overhead	3.00
Fixed overhead	1.00
Marketing (fixed)	7.00
Distribution (variable)	3.60
	$24.60

Current monthly sales are 95,000 units at $30.00 each. Suzie, Inc., has contacted Mickey Corporation about purchasing 2,000 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is the change in operating profits if the one-time-only special order is accepted?

Group of answer choices

$14,800 increase

$12,000 decrease

$1,200 deccease

$17,200 increase

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Question 61 pts

What is the minimum price Mickey Corporation should bid on this special order?

Group of answer choices

$16.6

$17.6

$13

$24.6

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Question 71 pts

Bill Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:

Direct materials	$ 1.00
Direct labor	10.00
Variable overhead	5.00
Fixed overhead	8.00
Total	$24.00

Bill Company has contacted Stephans with an offer to sell them 5,000 of the subassemblies for $22.00 each. Stephans will eliminate $25,000 of fixed overhead if it accepts the proposal.

Should Stephans make or buy the subassemblies? What is the difference between the two alternatives?

Group of answer choices

Make; savings =$60,000

Buy; savings =$50,000

Buy; savings =$20,000

Make; savings =$5,000

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Question 81 pts

Which of the following is a qualitative factor that a company should consider when deciding whether to buy or make a part used in manufacturing their product?

Group of answer choices

Timeliness of delivery

Quality of the outside producers product

Potential loss of trade secrets

All of the above

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Question 91 pts

Answer questions 9-10 using the following information:

Kndrick Inc. is considering replacing a machine. The following data are available:

Replacement

	Old Machine	Replacement Machine
Original cost	$45,000	$35,000
Useful life in years	10	5
Current age in years	5	0
Book value	$25,000
Disposal value now	$8,000
Annual cash operating costs	$7,000	$4,000

Which of the data provided in the table is a sunk cost?

Group of answer choices

the disposal value of the old machine

the original cost of the old machine

the annual cash operating costs of the old machine

the annual cash operating costs of the new machine

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Question 101 pts

The difference between keeping the old machine and replacing the old is:

Group of answer choices

$37,000 in favor of keeping the old machine

$12,000 in favor of replacing the old machine

$37,000 in favor of replacing the old machine

$12,000 in favor of keeping the old machine

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Question 111 pts

Carter Corporation is considering eliminating one product line because of losses over the past year. The information is summarized below:

Sales (1,000 units)	$300,000
Direct materials	150,000
Direct labor	60,000
Variable overhead	70,000
Fixed overhead	30,000
Operating loss	(10,000)

If the company drops the product line, operating income will

Group of answer choices

decrease by $20,000

decrease by $10,000decrease by $10,000

increase by $30,000

increase by $10,000

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Question 121 pts

Which of the following is TRUE of an opportunity cost?

Group of answer choices

The higher the opportunity costs, the lower the relevant cost

It is the contribution to operating income that is foregone by not using the next-best alternative

It is recorded as an expense in the accounting records.

In terms of most short-run decisions, it is irrelevant.

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Question 131 pts

Answer questions 13-15 using the information below:

The Mihaylo College of Business and Economics is planning to hold a fundraising banquet at Los Coyotes Country Club. The rental cost is $1,000 and food cost is $12 per person. The college has also budgeted $2,600 for administrative and marketing expenses for the event. Tickets are expected to be $30 per person.

What is the contribution margin per person?

Group of answer choices

$42

$30

$12

$18

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Question 141 pts

How many tickets must be sold if the university wants to raise $3,600 after all expenses?

Group of answer choices

100

200

500

400

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Question 151 pts

What is the degree of operating leverage if 300 people attend?

Group of answer choices

2.5

3

2

1.5