1. Berk Company produces three products: Tic, Tac, and Toe. Tic requires 280 machine setups, Tac requires 700 setups, and Toe requires 140 setups. Berk has identified an activity cost pool with allocated overhead of $140,000 for which the cost driver is machine setups. How much overhead is assigned to the Tic product?
2. Simmerman Company manufactures two products, Product A and Product B. The company's overhead costs consist of setting up machines, $100,000; machining, $50,000; and inspecting, $150,000. Information on the two products is:
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Product A
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Product B
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Total
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|
Direct labor hours
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8,000
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32,000
|
40,000
|
|
Machine setups
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200
|
800
|
1,000
|
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Machine hours
|
10,000
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40,000
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50,000
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Inspections
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300
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1,200
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1,500
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Calculate the amount of overhead applied to Product A using traditional costing based on direct labor hours.
3. Baldwin CPA Firm performs two types of services, Audit and Tax. Baldwin's overhead costs consist of computer support, $20,000; and legal support, $10,000. Information on the two services is:
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Audit
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Tax
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Total
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|
Direct labor cost
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$112,500
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$37,500
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$150,000
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|
CPU minutes
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37,500
|
12,500
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50,000
|
|
Legal hours used
|
750
|
250
|
1,000
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Baldwin performs tax services for Katie Lynn. Direct labor cost is $1,700; 850 CPU minutes were used; and 9 legal hours were used. What is the total cost of the Lynn job using activity-based costing?
4. Forrest Company incurs overhead costs each year in its three main departments, setup ($60,000), machining ($30,000), and packing ($90,000). Information about Forrest's two products is as follows:
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Product A1
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Product B1
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Total
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|
Number of setups
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26
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14
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40
|
|
Machining hours
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3,250
|
1,750
|
5,000
|
|
Orders packed
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325
|
175
|
500
|
|
Number of products manufactured
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390
|
610
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1,000
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Using ABC, how much overhead is assigned to Product A1 each year?
5. Fixed costs are $50,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars?
6. Carter Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $14 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $7 per unit. How much is the contribution margin ratio
7. At the high level of activity in November, 26,100 machine hours were run and power costs were $18,600. In April, a month of low activity, 5,600 machine hours were run and power costs amounted to $10,400. Using the high-low method, calculate the estimated fixed cost element of power costs.
8. The following monthly data are available for Ellison Company which produces only one product: Selling price per unit, $66; Unit variable expenses, $33; Total fixed expenses, $78,000; Actual sales for the month of June, 6,400 units. How much is the margin of safety (in dollars) for the company for June?
9. Grayson Company's high and low level of activity last year was 8,450 units of product produced in May and 3,700 units produced in November. Machine maintenance costs were $16,400 in May and $12,600 in November. Use the high-low method to determine an estimate of the total maintenance cost for a month in which production is expected to be 6,290 units.
10. Sampson Manufacturing has fixed costs of $98,000 and variable costs are 58% of sales. What are the required sales if the company desires net income of $70,000?
11. In 2016, Hudson Corp. sold 3,000 units at $80 each. Variable expenses were $65 per unit, and fixed expenses were $4,900. The same variable expenses per unit and fixed expenses are expected for 2017. If the company cuts selling price by 10%, what is its break-even point in units for 2017?
12. Sorento Company has two divisions: Sporting Goods and Sports Gear. The sales mix is 75% for Sporting Goods and 25% for Sports Gear. The company incurs $150,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. What is the company's weighted-average contribution margin ratio?
13. Brad's Breads can produce and sell only one of the following two products:
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Oven Hours Required
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Contribution Margin per Unit
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|
Classic Bread
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1.2
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$17
|
|
Premium Bread
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1.3
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$18
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The company has oven capacity of 3,000 hours. How much will the total contribution margin be if it produces only the most profitable product?
14. Canvas Co. sells its product for $88 per unit. During 2016, it produced 34,000 units and sold 33,000 units (there was no beginning inventory). Costs per unit are: direct materials $29, direct labor $23, and variable overhead $17. Fixed costs are: $408,000 manufacturing overhead, and $51,000 selling and administrative expenses. What is the per unit manufacturing cost under variable costing?
15. Miller Corp. sells its product for $570 per unit. Production was 18 units per year in 2015-2017. Sales were 13 units in 2015, 20 units in 2016, and 21 units in 2017. The following additional information is available.
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Variable costs per unit
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|
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Variable manufacturing overhead
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$315
|
|
Variable selling and administrative
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$16
|
|
|
|
|
Fixed costs per year
|
|
|
Fixed manufacturing overhead
|
$1,710
|
|
Fixed selling and administrative
|
$2,280
|
Calculate the company's net income under variable costing for 2016.
16. Morrison Corporation has sales of $340,000, variable costs of $120,000, and fixed costs of $95,000. What is the company's degree of operating leverage?