THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 5 6.

Test Company uses a normal, functional-based cost system to determine product cost. The company estimated the following amounts for the current year.

	Department 1	Department 2	Total
Overhead	$200,000	$300,000	$500,000
Direct labor hours	40,000	60,000	100,000
Machine hours	25,000	15,000	40,000

Test Company reported the following actual amounts for July.

	Department 1	Department 2	Total
Prime cost	$25,000	$20,000	$45,000
Overhead	$16,000	$20,000	$36,000
Direct labor hours	3,000	5,500	8,500
Machine hours	2,000	1,500	3,500

Assume that Test Company uses a plant-wide overhead rate based on direct labor hours to apply overhead.

5. Determine the total product cost for July.

Note: Give your answer using dollar signs and commas but no decimal points (cents).

Example: $12,345

6.

Assume that Test Company used departmental overhead rates to apply overhead. Overhead in Department 1 is applied based on machine hours. Overhead in Department 2 is applied based on direct labor hours. Determine the total product cost for July.

Note: Give your answer using dollar signs and commas but no decimal points (cents).

Example: $12,345

17.

Test Company produces a component part included in its final product. A supplier has contacted the company with an offer to provide the component part for $60 per unit. In evaluating the offer, Test Company identified the following costs to produce the component.

Direct materials	$25 per unit
Direct labor	$10 per unit
Variable overhead	$15 per unit
Fixed overhead	$10,000 per month

Test Companys average monthly demand is 4,000 components per month.

Assume that 20% of the fixed overhead can be avoided if Test Company discontinues production of the component.

Determine the total relevant cost of producing the component.

Note: Give your answer using dollar signs and commas but not decimal points (cents).

Example: $12,345

19.

Test Company produces two products from a common input: Product A and Product B. One batch of the common input yields 600 units of Product A and 200 units of Product B. The joint costs for one batch are $25,000. Product A can be sold at the split-off point for $80 per unit. Product B can be sold at the split-off point for $150 per unit. Alternatively, Product B can be processed into 120 units of Product C that will sell for $400 per unit. Additional process costs for one batch of Product C will be $5,500.

Determine the increase (decrease) in income if Product B is processed further into Product C.

overhead costs are avoidable if Test Company discontinues production of the component.

Determine the total relevant cost of producing the component.

Note: Give your answer using dollar signs and commas but not decimal points (cents). Give negative numbers in parentheses.

Example: $12,345 or $(12,345)