Water-Pacific Company sells a single product for $39.50 per unit. If variable expenses are 64.0 % of sales and fixed expenses total $13,500, the break-even point in quantity and dollar($) will be(3 points):

2. At the end of the year, actual manufacturing overhead costs were $120,000 and applied manufacturing overhead costs were $160,175. If the denominator activity for the year was 20,000 machine-hours, and if 21,500 standard machine-hours were allowed for the year's production, Calculate the predetermined overhead rate per machine-hour(3 points).

3. Central Company has two product lines, J and K. During June, the company's net operating income was $25,000, and the common fixed expenses were $37,000. The contribution margin ratio for J was 30%, its sales were $200,000, and its segment margin was $21,000. If the contribution margin for K was $80,000, Calculate the segment margin for K(3 points).

4. The Wall-shire Company has three divisionsNorthern, Western, and Southern. The divisions have the following revenues and expenses: Northernn Western Southern

Sales $450,000 $410,000 680,000

Variable expenses 225,000 140,000 242,000

Traceable fixed expenses 165,000 105,000 218,000

Allocated common corporate expenses 92,000 85,000 135,000

Net operating income (loss) $(32,000) $ 80,000 $ 85,000

Management of Kosco is considering the elimination of the Northern Division. If the Northern Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected. Given these data, what is your decision, eliminating or keeping it and why? Justify your decision, showing your calculation, and overall companys net operating income or loss, before and after eliminating Northern Division(3 points).

5. United Corporation manufactures laser printers. United currently manufactures the 32,000 imaging drums that it uses in its printers. The annual costs to manufacture these 32,000 drums are as follows:

Cost of drum Total cost

Variable manufacturing cost $23 $736,000

Fixed manufacturing cost .. $65 $2,080,000

Total cost $88 $2,816,000

Hardware Solutions Inc. has offered to provide United with all of its imaging drum needs for $72 per drum. If United accepts this offer, 70% of the fixed manufacturing cost above could be totally eliminated. Also, United will be able to use the freed up space to generate $240,000 of income each year in the production of alternative products.

Based on the information presented, would United be better off to make the drums or buy the drums and by how much(3 points)?

6. Speedy Delivery Services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years(3 points):

Year	Miles	Operating Costs
2007	110,000	$390,000
2008	140,000	$420,000
2009	100,000	$360,000
2010	130,000	$410,000
2011	150,000	$440,000

a. Using the high-low method, what is the cost estimate for variable costs for 2012?

b. Using the high-low method, what is the cost estimate for fixed costs for 2012?

c. What is the best estimate of total operating expenses for 2012 using the high-low method based on total expected miles of 120,000?

7. Division-A makes a part that it sells to customers outside of the company. Data concerning this part appear below:

Selling price to outside customers ----------------------- $75

Variable cost per unit -------------------------------------- $50

Total fixed costs ------------------------------------- $400,000

Capacity in units ---------------------------------------- 25,000

Division-B of the same company would like to use the part manufactured by Division-A in one of its products. Division-B currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division-A. Division-B requires 5,000 units of the part each period. Division-A can already sell all of the units it can produce on the outside market. What should be the lowest acceptable transfer price from the perspective of Division-A (3 points)?

8. The Tesla Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720,000. If these microcomputers are upgraded at a total cost of $100,000, they can be sold for a total of $160,000. As an alternative, the microcomputers can be sold in their present condition for $50,000(6 points).

a. Compute the sunk cost in this situation is.

b. What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?

c. Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?

9. Wright Industry Inc. uses a standard cost system in which direct materials inventory is carried at standard cost. Wright has established the following standards for the prime costs of one unit of product.

Standard Qty Standard Price Standard Cost/unit

Direct material .. 8 pounds $1.80 per pound $14.40

Direct labor 0.25 hour $8 per hour $2.00

Variable overhead .. 0.5 hours at $2 per hour

During May, the company purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Wright manufactured 19,000 units of product using 142,500 pounds of direct material and 5,000 direct labor-hours(8 points).

a. Calculate the materials price variance.

b. Calculate the materials quantity variance.

c. Calculate the direct labor rate variance.

d. Calculate the direct labor efficiency variance.

10. Classify the following costs incurred in the manufacturing of cookie bars as either (a) Product Cost- Direct Materials, (b) Product Cost- Conversion, or (c) Period Cost (5 points).

	Cost Incurred in Manufacturing of Cookies	Classification
a.	Depreciation on Automated Wrapping Machine
b.	Cookie Dough
c.	Peanut Butter
d.	Plant Managers Salary of $90,000
e.	Overtime Pay of Production Workers
f.	Cost of Air Time for New Radio Advertising
g.	Salary of Plant Security Guard
h.	Salary of Company Controller
i.	Depreciation on Computers in Legal Staff Office
j.	Manufacturing Departments Allocation of Cafeteria Costs