ACCOUNTING- (TCO 1) Merriamn Company provides the following ABC costing information:

1.(TCO1)ABC systems create(Points : 5)

2.(TCO 1) Merriamn Company provides the following ABC costing information:

The above activities are used by Department A and B as follows:

How much of the inquiry cost will be assigned to Department A?

(Points : 5)

3.(TCO 2)A master budget(Points : 5)

4.(TCO 2) White planned to use $82 of material per unit but actually used $80 of material per unit, and planned to make 1,200 units but actually made 1,000 units. The sales-volume variance is(Points : 5)

5.(TCO 3) Which of the following does NOT represent a cause-and-effect relationship?(Points : 5)

6.(TCO 4)Relevant costs of a make-or-buy decision include all of the following EXCEPT(Points : 5)

7.(TCO 5) Constraints may include(Points : 5)

8.(TCO 5) Jensen Company has relevant costs of $80 per unit to manufacture Part A. A current supplier offers to make Part A for $70 per unit. If capacity is constrained, the opportunity cost of buying Part A from the supplier is(Points : 5)

9.(TCO 3)The cost components of an air conditioner include $35 for the compressor, $11.50 for the sheet-molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs?(Points : 5)

10.(TCO 4)Sunk costs(Points : 5)

1.(TCO 1)

Trustme Vehical Rental Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways.

Car Rental Truck Rental

Number of vehicles in fleet 700 300

Number of employees 150 50

Sales $1,500,000 $750,000

1. If administrative expense of $125,000 is allocated on the basis of number of employees, the amount allocated to the truck rental department would be

2.If administrative expense of $125,000 is allocated on the basis of number of employees, the amount allocated to the car rental department would be

3.If advertising expense of $150,000 is allocated on the basis of sales, the amount allocated to the car rental department would be

4.If advertising expense of $225,000 is allocated on the basis of sales, the amount allocated to the truck rental department would be

5.If the facility lease expense of $350,000 is allocated on the basis of vehicles in the fleet, the amount allocated to the truck rental department would be

(Points : 25)

2.(TCO 2) Favata Company has the following information:

Month Budgeted Sales

June $60,000

July 51,000

August 40,000

September 70,000

October 72,000

In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales.

Prepare a purchases budget for July through September.

(Points : 25)

3.(TCO 3) As part of his job as cost analyst, Max Thompson collected the following information concerning the operations of the Machining Department:

Observation Machine-hours Total Operating Costs

January 4,000 $45,000

February 4,600 49,500

March 3,800 45,750

April 4,400 48,000

May 4,500 49,800

Use the high-low method to determine the estimating cost function with machine-hours as the cost driver.

(Points : 25)

4.

(TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are:

Direct materials $0.60

Direct manufacturing labor 3.00

Variable manufacturing overhead 1.20

Fixed manufacturing overhead 1.60

Total $6.40

Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 ifKirklandaccepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated.

a. What is the relevant per unit cost for the original part?

b. Which alternative is best for Kirkland Company? By how much?

(Points : 25)