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UNIVERSITY OF MARYLAND UNIVERSITY COLLEGE COST ACCOUNTING ACCT321 Each question is worth 5 points each and each exercise is worth 12.5 points each. NOTE: Be sure to show all your detailed calculations. This has the possibility of partial credit for the exercises. There isn't any partial credit for the questions. 1. Manhattan Corporation has several divisions that operate as decentralized profit centers. At the present time, the Fabrication Division has excess capacity of 6,000 units with respect to the UT-371 circuit board, a popular item in many digital applications. Information about the circuit board is presented next. Market price $50 Variable selling/distribution costs on external sales $ 7 Variable manufacturing cost $23 Fixed manufacturing cost $12 Manhattan's Electronic Assembly Division wants to purchase 5,500 circuit boards either internally or else use a similar board in the marketplace that sells for $47. The Electronic Assembly Division's management feels that if the first alternative is pursued, a price concession is justified, given that both divisions are part of the same firm. To optimize the overall goals of Manhattan, what is the minimum price to be charged for the board from the Fabrication Division to the Electronic Assembly Division? 2. MinnOil performs oil changes and other minor maintenance services (e. g., tire pressure checks) for cars. The company advertises that all services are completed within 18 minutes for each service. On a recent Saturday, 195 cars were serviced resulting in the following labor variances: rate, $22 unfavorable; efficiency, $17 favorable. If MinnOil's standard labor rate is $9 per hour, determine the actual wage rate per hour and the actual hours worked. 3. Lee Manufacturing uses a standard cost system with overhead applied based on direct labor hours. The manufacturing budget for the production of 7,000 units for the month of June included 12,500 hours of direct labor at $17.00 per hour, or $212,500. During June, 6,400 units were produced, using 12,500 direct labor hours, incurring $52,000 of variable overhead, and showing a variable overhead efficiency variance of $4,200 unfavorable. What was the standard variable overhead rate per direct labor hour? 4. Two segments (Mountain Bike and Road Bike) showed the following data for the most recent year: Mountain bike Road bike Contribution to indirect expenses Assets directly used by and identified with the segment Sales Mountain Bike $ 840,000 $ 2,520,000 3,360,000 Page 1 of 2 Road Bike 504,000 2,184,000 6,720,000 a. Calculate return on investment for each segment in the most direct manner. b. Calculate return on investment using the margin and turnover components. ACCT321 Week Seven Quiz Three Concluded: Page 3 of 3 5. Given the following data, prepare a schedule that shows contribution margin, contribution to indirect expenses, and net income of the Sharks Division of Hockey, Inc.: Direct fixed expenses $ 425,000 Indirect fixed expenses 325,500 Sales 2,400,000 Variable expenses 1,800,000 What would be the effect on the company income if the segment was eliminated? 6. Three segments (A, B, and C) of Trump Enterprises have net sales of $500,000, $300,000, and $200,000, respectively. A decision is made to allocate the pool of $50,000 of administrative overhead expenses of the home office to the segments, using net sales as the basis for allocation. a. How much of the $50,000 should be allocated to each segment? b. If Segment C is eliminated, how much of the $50,000 will be allocated to A and B? END OF ACCT321 WEEK 7 Page 2 of 2