1) Under absorption costing, a company had the following unit costs when 13,500 units were produced.
Direct labor $ 11.25 per unit
Direct material $ 11.75 per unit
Variable overhead $ 9.50 per unit
Fixed overhead ($175,500 / 13,500 units) $ 13.00 per unit
Total production cost $ 45.50 per unit
Compute the total production cost per unit under variable costing if 58,500 units had been produced.
(a) $45.50
(b) $23.00
(c) $35.50
(d) $32.50
(e) $34.50
2) Use the following data to find the direct labor rate variance.
Direct labor standard (4.0 hrs.@ $ 7/hr.) $28 per finished unit
Actual hours worked per unit 3.5 hours
Actual units produced 4,100 units
Actual rate per hour 7.25 per hour
(a) $3,588 unfavorable.
(b) $16,400 favorable.
(c) $14,350 favorable.
(d) $16,400 unfavorable.
(e) $3,588 favorable.
3) General Chemical produced 45,000 gallons of Greon and 90,000 gallons of Baron. Joint costs incurred in producing the two products totaled $28,500. At the split-off point, Greon has a market value of $6 per gallon and Baron $2 per gallon. What portion of the joint costs should be allocated to Greon if the basis is market value at point of separation?
(a) $19,000
(b) $5,700
(c) $11,400
(d) $17,100
(e) $9,500
4) If a manager were concerned with the time value of money, from which two capital budgeting methods should the manager choose?
(a) IRR or Payback.
(b) BET or IRR.
(c) BET or Payback.
(d) NPV or ARR.
(e) NPV or Payback
5) Marsden manufactures a cat food product called Special Export. Marsden currently has 20,000 bags of Special Export on hand. The variable production costs per bag are $1.9 and total fixed costs are $20,000. The cat food can be sold as it is for $9.1 per bag or be processed further into Prime Cat Food and Feline Surprise at an additional $3,600 cost. The additional processing will yield 20,000 bags of Prime Cat Food and 5,400 bags of Feline Surprise, which can be sold for $8.1 and $6.1 per bag, respectively.
The net advantage (incremental income) of processing Special Export further into Prime and Feline Surprise would be:
(a) $194,940
(b) $3,600
(c) $12,940
(d) $191,340
(e) $9,340