QUESTION 26 Dragon Fire Hot Sauce makes two types of hot sauces-meek and mild. Budgeted information for the two flavors appears below: Meek Mild Sales $600,000 $400,000 Direct materials $100,000 $120,000 Direct labor cost $108,000 $180,000 Labor hourly cost $12.00 $12.00 The company estimates it will incur $345,600 in overhead costs for the period, Dragon Fire allocates overhead cost to products based on the labor hours worked on each product. How much is the total overhead applied to Meek? O $130,500 $129,600 $1,566 $348,000 Excellence Pastries produces baked goods. Utility costs are allocated to the products based on the baking time required for the product. Utility costs of $291,500 are budgeted in a period when 550.000 total minutes of baking time and 100,000 minutes of cooling time are anticipated. If a batch of rolls bakes for 45 minutes, and then cools for 15 minutes, what amount of utility cost will be allocated to each batch of rolls? O $38.87 $23.85 O $20.18 $31.80 Diamond Brands manufactures rice, wheat, and oat cereals. Sanders Company has approached Diamond Brands with a proposal to sell the company the rice cereals at a price of $22,000 for 20,000 pounds. The following costs are associated with production of 20,000 pounds of rice cereal: Direct material $13,000 Direct labor 5,000 Manufacturing overhead 7.000 Total $25,000 The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs. What is the amount of avoidable costs if Diamond Brands buys rather than makes the rice cereal? $25,000 $22,000 $23,000 $20,000 Diamond Brands manufactures rice, wheat, and oat cereals. Sanders Company has approached Diamond Brands with a proposal to sell the company the rice cereals at a price of $22,000 for 20,000 pounds. The following costs are associated with production of 20,000 pounds of rice cereal: Direct material $13,000 Direct labor 5,000 Manufacturing overhead 7.000 Total $25,000 The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs, which are 30% unavoidable. What is the incremental cost per pound that Diamond will incur) or save if it buys the rice cereal from Sanders? $1.175 savings $0.10 cost $0.075 savings $23.50 cost Diamond Brands manufactures rice, wheat, and oat cereals. Sanders Company has approached Diamond Brands with a proposal to sell the company the rice cereals at a price of $22,000 for 20,000 pounds. The following costs are associated with production of 20,000 pounds of rice cereal: Direct material $13,000 Direct labor 5,000 Manufacturing overhead 7.000 Total $25,000 The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated fixed costs. Should Diamond Brands make or buy the rice cereal? Buy them to save $4,000. O Continue to make them because the incremental cost of buying is $2,000 Buy them to save $2,000. Continue to make them because the incremental cost of buying is $22,000
