# ACCOUNTING C213-A manufacturer produces three products: A, B, and C

ACCOUNTING C213-A manufacturer produces three products: A, B, and C
1. A manufacturer produces three products: A, B, and C.
The company uses the following information to determine activity rates for each period:

Cost Pool

Costs

Total Activity

Pool 1

\$300,000

20,000 hours

Pool 2

\$20,000

500 pounds

Pool 3

\$10,000

100 moves

Total

\$330,000

Data concerning the three products appear below:

Cost Driver

Products A

Products B

Products C

Number of hours

10,000

7,500

2,500

Number of pounds

150

250

100

Number of moves

20

50

50

What is the total amount of overhead applied to product A?

\$265,000

\$125,500

\$150,000

\$158,000

2. A running shoe manufacturer produces three types of shoes: traditional, minimalist, and spikes.

The company uses the following information to determine activity rates for each pool:

Cost Pool

Costs

Total Activity

Shoe Production

\$250,000

20,000 pairs of shoes

Shoe batches

\$10,000

500 batches

Shoe design

\$5,000

100 parts

Total

\$265,000

Data concerning the three shoe products appear below:

Cost Driver

Minimalist

Spikes

Number of pairs of shoes

10,000

7,500

2,500

Number of batches

150

250

100

Number of parts

20

30

50

What is the total amount of overhead applied to spikes shoes?

\$31,250

\$100,250

\$35,750

\$265,000

3. Given the following information:

Pairs of shoes expected to be produced

1,950,000

Paris of shoes produced

2,500,000

\$0.75

What is the amount of applied overhead?

\$412,500

\$550,000

\$1,875,000

\$1,462.500

4. Company A calculated the following information under traditional and activity-based costing for the production and sale of 1,000 units of Product B:

ABC

Sales

\$100,000

\$100,000

Cost of goods sold

\$70,000

\$110.000

Gross margin

\$30,000

(\$10,000)

Which decision should be made about the selling price of Product B?

The price of Product B should be decreased

The price of Product B should be increased

Traditional costing should be used instead of activity-based costing

The number of production batches of Product B should be increased

5. A company reported the following information for the production and sale of 500,000 gallons of oil:

Sales; \$1,500,000

Production costs:

Direct materials \$575,000

Direct labor \$300,000

Applied overhead (Using ABC)

Overhead based on # of gallons \$375,000

Overhead based on # of batches \$100,000

Overhead based on # of ingredients \$180,000

Total production cost \$1,530,000

Gross profit (\$30,000)

Overhead was applied based upon the following predetermined overhead rates:

\$0.75 per gallon

\$500 per batch

\$1,000 per ingredient

What would be the gross profit if the company increased their selling price per gallon by \$0.10?

\$10,000

\$20,000

\$50,000

\$75,000

6. Which two concepts are studied in cost-volume-profit analysis?

Levels of activity

Inventory

Liabilities

Profits

7. What are two impacts on costs as sales volume increases?

Fixed costs per unit will increase

Fixed costs per unit will stay the same

Fixed costs per unit will decrease

Total fixed costs will decrease in direct proportion

Total fixed costs will stay the same

Total fixed costs will increase in direct proportion

8. A company manufactures and sells widgets. The following information is available:

Each widget sells for \$100

The variable cost per widget is \$50

Total fixed costs per month are \$300,000

How many widgets does the company need to sell each month to break even?

6,000

4,500

3,000

2,000

9.

What do total revenues equal at the break-even point?

\$2,000

\$2,500

\$4,500

\$6,500

65.

Which statement is true with respect to the point on this graph when sales are at 150 units per month?

Total costs equal \$3.500

Fixed costs equal \$2,750

Total costs equal \$2,000

Sales revenue equals \$2,500

66.A company is experiencing an increase in their bad debt expense

Which change in credit policy would cause this increase?

Credit terms of 2/10, n/30 were granted on all credit sales

The company tightened their credit policy

Some customers were allowed to pay their bills in 60 days versus the normal 30 days

Credit lines were increased for all customers

67.A company has projected the following sales for the spring quarter of 2014:

April \$200,000

May \$250,000

June \$275,000

65% of all sales are paid for with cash. The remainder is on credit.

The pattern for credit receivables collections are:

Month of sale 60%

Month after sale 30%

Second month after sale 10%

What are the forecasted cash collections for the month of June?

\$275,000

\$178,750

\$269,750

\$248,750

68.A company budgeted the following purchases for raw materials:

69.

Month

January

February

March

April

May

June

July

Budget

\$10,000

\$20,000

\$25,000

\$22,000

\$27,000

\$30,000

\$24,000

The company has a policy of paying for 40% of the purchases in the month of purchase, 35% in the month following the purchase, and 25% in the second month following the purchase.

Based on this information, what are the budgeted cash disbursements for May?

\$27,300

\$25,050

\$24,750

\$18,500

70. A company plans to purchase inventory for the second half of 2014 as follows:

July \$100,000

August \$75,000

September \$225,000

October \$125,000

November \$250,000

December \$30,000

They usually pay 50% of inventory purchases in the month of purchase, 35% in the following month, and 15th in the second month.

Based on this information, what are the forecasted total 2014 cash payments for inventory purchased in the second half of 2014?

\$705,000

\$752,500

\$790,000

\$805,000

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