Need solutions to questions below – with steps: 45. All other things being equal, a company that sells multiple products should attempt to structure its sales mix so the greatest portion of the

Need solutions to questions below – with steps:

45. All other things being equal, a company that sells multiple products should attempt to

structure its sales mix so the greatest portion of the mix is composed of those products

with the highest:

a. selling price.

b. variable cost.

c. contribution margin.

d. fixed cost.

e. gross margin.

*44. GoGrow produces shovels and rakes. Sales and costs for the most recent year are

indicated below:

Shovels Rakes Total

Units 8,000 20,000 28,000

Sales revenue $160,000 $40,000 $200,000

Variable costs 98,000 18,000 116,000

Fixed costs 28,000 12,000 40,000

Profit $ 34,000 $10,000 $ 44,000

The number of units and selling price per unit appears to be stable for the

foreseeable future. How much total revenue will GoGrow have at breakeven?

A. $95,238

B. $13,333

C. $146,663

D. $156,000

39. Snider, Inc., which has excess capacity, received a special order for 4,000 units at

a price of $15 per unit. Currently, production and sales are budgeted for 10,000

units without considering the special order. Budget information for the current

year follows.

Sales $190,000

Less: Cost of goods sold 145,000

Gross margin $ 45,000

Cost of goods sold includes $30,000 of fixed manufacturing cost. If the special

order is accepted, the company’s income will:

A. increase by $2,000.

B. decrease by $2,000.

C. increase by $14,000.

D. decrease by $14,000.

E. change by some other amount

HiTech Products manufactures three types of remote-control devices: Economy,

Standard, and Deluxe. The company, which uses activity-based costing, has identified

five activities (and related cost drivers). Each activity, its budgeted cost, and related cost

driver is identified below.

Activity Cost Cost Driver

Material handling $ 225,000 Number of parts

Material insertion 2,475,000 Number of parts

Automated machinery 840,000 Machine hours

Finishing 170,000 Direct labor hours

Packaging 170,000 Orders shipped

Total $3,880,000

IMBA 6050 Final Exam Page 8 of 18

The following information pertains to the three product lines for next year:

Economy Standard Deluxe

Units to be produced 10,000 5,000 2,000

Orders to be shipped 1,000 500 200

Number of parts per unit 10 15 25

Machine hours per unit 1 3 5

Labor hours per unit 2 2 2

*19. Under an activity-based costing system, what is the per-unit cost of Standard?

A. $164.

B. $228.

C. $272.

D. $282.

*20. Assume that HiTech is using a volume-based costing system, and the preceding

manufacturing costs are applied to all products based on direct labor hours.

How much of the preceding cost would be assigned to Deluxe?

A. $456,471.

B. $646,471.

C. $961,176.

D. $1,141,176.

14. Fletcher Company disposes of under- or overapplied overhead at year-end as an

adjustment to cost of goods sold. Prior to disposal, the firm reported cost of

goods sold of $590,000 in a year when manufacturing overhead was

underapplied by $15,000. If sales revenue totaled $1,400,000, determine (1)

Fletcher’s adjusted cost of goods sold and (2) gross margin.

Adjusted Cost

of Goods Sold

Gross Margin

A. $575,000 $810,000

B. $575,000 $825,000

C. $590,000 $810,000

D. $605,000 $795,000

E. $605,000 $810,000

13. Carlson charges manufacturing overhead to products by using a predetermined

application rate, computed on the basis of labor hours. The following data

pertain to the current year:

Budgeted manufacturing overhead: $1,600,000

Actual manufacturing overhead: $1,632,000

Budgeted labor hours: 50,000

Actual labor hours: 48,000

Which of the following choices denotes the correct status of manufacturing

overhead at year-end?

A. Overapplied by $32,000.

B. Underapplied by $32,000.

C. Overapplied by $68,000.

D. Overapplied by $96,000.

E. Underapplied by $96,000.

Dale Company, which applies overhead at the rate of 190% of direct labor cost,

began work on job no. 101 during June. The job was completed in July and sold

during August, having accumulated direct material and labor charges of $27,000

and $15,000, respectively. On the basis of this information, the total overhead

applied to job no. 101 amounted to:

A. $0.

B. $28,500.

C. $51,300.

D. $70,500.

E. $79,800.

Sweet Products produces mint syrup used by gum and candy companies.

Recently, the company has had excess capacity due to a foreign supplier entering

its market. Sweet Products is currently bidding on a potential order from Red

Sugar Candy for 5,000 cases of syrup. The estimated cost of each case is $27.50, as

follows: direct material, $10; direct labor, $5; and manufacturing overhead,

$12.50. The overhead rate of $2.50 per direct labor dollar is based on estimated

annual overhead of $1,500,000 and estimated direct labor of $600,000, composed

of $400,000 of variable costs and $1,100,000 of fixed costs. The largest fixed cost

relates to depreciation of plant and equipment. Should Sweet Products bid on the

Red Sugar Candy business at $20 per case?

A. No, because the incremental loss will be $7.50 per case.

B. Yes, because the incremental profit will be $1.67 per case.

C. No, because there are too many qualitative considerations.

D. Yes, because the incremental profit will be $2.50 per case.

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