Question 11

The following data relate to Department no. 2 of Velma Corporation: Segment contribution margin $580,000 Profit margin controllable by the segment manager 356,000 Segment profit margin 63, 600 On the basis of this information, fixed costs traceable to Department no. 2 but controllable by others are:The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: Restin, Los Angeles Bay Area Central Valley Inc. Division Division Division Revenues $1, 096,080 $312,080 $347,808 $437,090 Variable operating expenses 611, 608 171, 600 190,090 250,090 Controllable fixed expenses 252,060 79,090 89,808 84,800 Noncontrollable fixed expenses 102, 008 29,080 34,090 39,080 In addition, the company Incurred common fixed costs of $22,200. Assume that the Los Angeles division Increases its promotion expense, a controllable fixed cost, by $22.600. As a result, revenues Increased by $62,400. If variable expenses are tied directly to revenues, the new Los Angeles segment profit margin is:Kingston Manufacturing has 27.000 labor hours available for producing X and Y. Consider the following information: Product X Product Y Required labor time per unit (hours) 2 Maximum demand (units) 6,080 Contribution margin per unit 5 6 Contribution margin per labor hour $ 2.60 $ 1.50 If Kingston follows proper managerial accounting practices, how many units of Product Y should it produce?Krate Inc. is considering a $648,000 investment in new equipment that is anticipated to produce the following net cash inflows: Year Net Cash Inflows $120,008 INH 242,008 120,908 83,008 166,908 If cash flows occur evenly throughout a year, the equipment's payback period is:Sparkle Metallurgy, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly). The company allocates Building Maintenance cost on the basis of square footage and Human Resources cost on the basis of employees. It believes that Building Maintenance provides more service than Human Resources. The square footage and employees In each department follow. Square Footage Employees Human Resources 10,080 Building Maintenance 10,080 33 Machining 22,080 48 Assembly 28,080 72 Assuming use of the step-down method, which of the following choices correctly denotes the number of square feet and employees over which the Building Maintenance cost and Human Resources cost would be allocated (Le., spread)? Building Maintenance Human Resources A. 50,0ae 120 60,080 120 C. 60,090 138 70,080 130 None of the answers is correctA machine is expected to produce annual savings in cash operating costs of $520,000 for the next six years. FV of 1 (i = 7%, n = 6): 1.501 FV of a series of $1 cash flows (i = 7%, n = 6): 7.153 PV of $1 (i = 7%; n = 6): 8.666 PV of a series of $1 cash flows (i = 7%, n = 6): 4.767 If the company has a(n) 7% after-tax hurdle rate and Is subject to a 30% Income tax rate, the correct discounted net cash flow would be:Hsu Company manufactures two products (A and B) from a joint process that cost $310,000 for the year just ended. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products Involved. Further Information follows. If Processed Further Per- Pound Pounds Sales Sales Separable Product Produced Price Value Cost A 40,080 $12 $400,080 $100,080 60,080 310,080 70,080 If the joint costs are allocated based on the physical-units method, the amount of joint cost assigned to product A would be