QUESTIONS

1-Maxx Inc has provided the following data from its activity-based costing system:

Activity cost pools Total cost Total activity

Designing products $387600 6550 product design hours

Setting up batches $52678 7366 batch set-ups

Assembling products $25122 4018 assembly hours

The activity rate for the designing products' activity cost pool is what?

2- Sasha company allocated the estimated $192100 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions the costs will be allocated based on the number of employees using the direct method. Information regarding cost and employees follows:

Department Employees

Accounting 4

Production 32

sales 15

How much of the accounting department costs will be allocated to the production?

3- Medusa company allocates costs from the payroll department (S1) and the maintenance department (S2) to the molding (P1), finishing (P2), and the packaging (P3) departments. Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet which the production department occupies within the factory. Information about the department is presented below:

Department Costs number of employees Number of square feet occupied

Payroll (S1) $139000 2 2000

Maintenance (S2) $220000 8 64000

Molding(P1) 68 100000

Finishing (P2) 46 60000

Packaging (P3) 16 40000

Medusa use the direct method to allocate costs. Round all answers to the nearest dollar. What amount of the payroll

department costs will be allocated to the molding department?

4- The Manassas Company has 55 obsolete keyboards that are carried in inventory at a cost of $9600. If these keyboards are upgraded at a cost of $6500,they could be sold for $19000. Alternatively, the keyboard could be sold as is for $7800. What is the net advantage or disadvantage of re-working the keyboards?

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 cost 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 $160400 Number of boxes shipped 20900 boxes

Final inspection $202200 Number of individual items 99100 items

shipped

General operations $83500 Number of orders 8900 orders

and supervision

During the period, the Far East sales office generated 673 orders for a total of 6020 items. These were shipped in 1421 boxes. What amount of shipping department costs should be allocated to these sales?

6- Sosa company has $39 per unit in variable costs and $1900000 per year in fixed costs. Demand is estimated to be 138000 units annually. What the price if a markup of 35% on total cost is used to determine the price? Round to two decimal places.

7- Bob's 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 to maximize profits?

Units sold price

30,000 $10

40,000 $9

50,000 $8

60,000 $7

8- Costa Company has a capacity of 40,000 units per year and is currently selling 35,000 for $ 400 eac h. Barton company has approached Costa about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving costa $20 per unit when compared to the normal packaging cost. Normally, Costa has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Costa accept this special order?

9- A company has $7.10 per unit in variable costs and $3.30 per unit in costs at a volume of 50,000 units. if the company marks up total cost by 0.41, what price should be charged if 67,000 units are expected to be sold?

What are the major purposes served by an after-the-fact project evaluation?Round to two decimal places.

10- A new product is being designed by an engineering team at Golden Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar product on the market suggests a price of $124.00 unit. The company requires a profit of 0.20 of selling price. How much is the target cost per unit? Round to two decimal places.