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
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?
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
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
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?
*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?
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.
of Goods Sold
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:
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.