Question 8 (10 points) A company that does consulting calculates the total cost for doing a job using a combination of the consulting time spent with the client at a rate of $73 per hour, plus overhead allocated at a rate of $20 per consulting hour. The total consulting hours estimated for the year is 5,000 hours. The company is considering using activity-based costing (ABC) to allocate overhead. All overhead costs can be assigned to the following activities: Activity Estimated Activity Activity Rate Travel to jobs 7,500 kilometres (km) $2.50/km Reporting 300 reports $16/report Job support 2,000 support hours $22/hr The company completed a job for a client using a total of 47 consulting hours. In addition, the job required total travel of 242 kilometres, total job support of 18 hours, and preparation of four reports. Required: 1. Determine the total cost of the job using the traditional costing system. (2 marks) 2. Determine the total cost of the job using the ABC system. (4 marks) 3. For this job, which method of applying overhead results in a higher profit if the selling price is the same for both methods? How much higher will the profit be? (2 marks) 4. Calculate the price charged to the client for this job if the company uses a 30% markup of the traditional cost. (1 mark) 5. For a manufacturing company, why is ABC usually not acceptable for external reporting that follows Generally Accepted Accounting Principles (GAAP)? (1 mark)Question 11 (6 points) The sales department of ACME Company has submitted the following forecast of unit sales for the year 2023: January February March April May Units to be sold 600 900 700 300 500 Management wants to end each month with nished goods inventory of 35% of the following month's sales. Each unit requires five pieces of direct material, and there must be an ending inventory of material each month of 20% of the following month's production needs. Each unit also requires 2.5 direct labour hours to produce at a direct iabour rate of $34 per hour. Required: 1. Prepare the production budget, in good form, for the month of January. (3 marks) 2. Prepare the direct labour budget, in good form, for the month of January. (3 marks) Question 12 (14 points) Last month's data for a company with two divisions was as follows: Division 1 Division 2 Sales $300,000 $200,000 Variable expenses as a percentage of sales 50% Traceable fixed expenses $80,000 Average operating assets $170,000 Minimum required rate of return 10% 12% The company's xed expenses total $220,000 per month. Required: 1. Prepare a segmented income statement in good form. (7 marks) 2. Using margin and turnover, calculate the return on investment (ROI) for Division 2. {2 marks) 3. Calculate the residual income for Division 2. (3 marks) 4. List two concerns a company might have about using return on investment (ROI) as a performance measure. (2 marks) Question 13 (7 points) The standard cost card for a company's product shows the following amounts for materials: Direct materials: 4.5 kgs per unit at $3.00 per kg During a recent month, the company planned to produce 3,000 units and had the following actual operating results: a. 3,200 units were produced. b. 15,000 kg of material was purchased at a cost of $3.20 per kg. c. 1,000 kg of material was still in inventory at the end of the month {there was no opening inventory]. Required: Calculate the direct material price and quantity variances. Show your work and label your variances with the name of the variance favourabie (F) or unfavourable (U). (7 marks) Question 14 (4 points} A company has a standard costing system that applies overhead using machine hours. Each item produced requires 2 hours of machine time and the budgeted level of activity is 1,500 machine hours. The predetermined overhead rate for fixed overhead is $4.40 per machine hour. The exible budget for manufacturing overhead is as foliows: Machine Hours: _Per MH LM L AM Variable overhead costs $ 1.65 $ 1,650 $ 2,475 $ 3,300 Fixed overhead cost 9% g g Total overhead costs $ am $ 2% $ 2% The most recent year had the following results: Actual number of units produced T40 Actual machine hours worked 1,554 Actual variable overhead costs $2,550 Actual fixed overhead costs $6,400 Required: Calculate the following: Blank #1: Fixed overhead budget variance (1 mark) Biank #2: Is the fixed overhead budget variance favourable or unfavourable? (enter F or U in the blank) (1 mark) Blank #3: Fixed overhead volume variance (1 mark) Blank #4: Is the fixed overhead volume variance favourable or unfavourable? (enter F or U in the blank) ('i mark)