Question 5 Ritz Company sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected and shipped. The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below: Cost Pool Total Costs Cost Driver Annual Activity Packaging and shipping $169,500 Number of boxes shipped 21,400 boxes Final inspection $195,900 Number of individual items shipped 96,400 items General operations and supervision $82,000 Number of orders 9,300 orders During the period, the Far East sales office generated 659 orders for a total of 6,160 items. These orders were shipped in 1,345 boxes. What amount of shipping department costs should be allocated to these sales? Question 6 Baller Financial is a banking services company that offers many different types of checking accounts. The bank has recently adopted an activity-based costing system to assign costs to their various types of checking accounts. The following data relate to the money market checking accounts, one of the popular checking accounts, and the ABC cost pools: Annual number of accounts = 56,000 accounts Checking account cost pools: Cost Pool Cost Cost Drivers Returned check costs $2,710,000 Number of returned checks Checking account reconciliation costs 51,000 Number of account reconciliation requests New account setup 640,000 Number of new accounts Copies of cancelled checks 378,000 Number of cancelled check copy requests Online banking web site maintenance 187,000 Per product group (type of account) Annual activity information related to cost drivers: Cost Pool All Products Money Market Checking Returned check 200,000 returned checks 18,000 Check reconciliation costs 378,000 checking account 420 New accounts 56,000 new accounts 15,000 Cancelled check copy requests 98,000 cancelled check 60,000 Web site costs 5 types of accounts 1 Calculate the overhead cost per account for the Money Market Checking. Question 7 Sosa Company has $39 per unit in variable costs and $1,900,000 per year in fixed costs. Demand is estimated to be 138,000 units annually. What is the price if a markup of 35% on total cost is used to determine the price? Question 8 Bobs Company sells one product with a variable cost of $5 per unit. The company is unsure what price to charge in order to maximize profits. The price charged will also affect the demand. If fixed costs are $100,000 and the following chart represents the demand at various prices, what price should be charged in order to maximize profits? Units Sold Price 30,000 $10 40,000 $9 50,000 $8 60,000 $7 $10 $9 $8 $7 Question 9 A retailer purchased some trendy clothes that have gone out of style and must be marked down to 30% of the original selling price in order to be sold. Which of the following is a sunk cost in this situation? the original selling price the anticipated profit the original purchase price the current selling price