QUESTION 25

1. Peregrine Inc. uses activity based costing with two categories of overhead: maintenance and inspections. Overhead rates for the coming year are as follows:

   Activity	Cost Driver	Activity Overhead Rate
   Maintenance	Machine Hours	$30/MH
   Inspection	Number of Inspections	$750/inspection

   Use the following data to estimate the total product cost of the potential job:

   Direct materials	$ 5,000
   Direct labor	$ 18,000
   Machine-hours	200
   Number of inspections	5
   Direct labor-hours	600

   		$32,750
   		$33,600
   		$31,600
   		$34,450

QUESTION 26

1. What might happen BELOW the relevant range of production?

   		Total fixed costs might increase, as volume increases.
   		Unit variable costs might decrease, as workers are highly experienced.
   		Unit variable costs might increase, as workers are not pressured to work efficiently.
   		Total fixed costs might decrease, as volume increases.

QUESTION 27

1. The portion of each dollar that can be used to cover fixed costs and provide a profit is known as:

   		Contribution margin ratio
   		Margin of safety in dollars
   		Gross margin ratio
   		Variable cost

QUESTION 28

1. What do we call the 'normal' range of production volume for a company?

   		The relevant range
   		The operating range
   		The linear range
   		The driving range