Question : PART I — MULTIPLE CHOICE (20 points) Instructions:  Designate the best : 1311536

PART I — MULTIPLE CHOICE (20 points)

 

Instructions:  Designate the best answer for each of the following questions.

 

 

1.Danolin Signs is bidding on painting buildings in a large apartment complex. The company has gathered the following information:

Estimated wages of 8 painters for the project$14,040

Estimated labor hours for the entire company  16,000

Estimated cost of fringes15% of labor

Desired profit margin per direct labor hour      $12

Expected number of units to be produced and sold      800

The cost of paint and other materials is $9,400. The average hourly wage per employee is $18 per hour with 780 hours estimated for the project. The overhead rate is 20% of total labor cost (including fringes.) The material loading charge is 10%. How much is the bid price if time-and-material pricing is used?

a.              $38,135

b.              $28,735

c.              $39,075

d.              Some other answer.

 

2.              What is a relevant cost?

a.              It is a sunk cost.

b.              It is a past cost.

c.              It is a cost that differ across alternatives.

d.              It is an opportunity cost.

 

3.              The Cookie Division of Kaboodle Foods manufactures home-style cookies which are sold for $4 per box. Its variable cost is $1.50 per box, and its fixed cost per unit is $0.90. Management would like the Mixing Division to transfer 20,000 boxes of cookies to another division within the company to be used to make snack pack lunches. The Cookie Division has available capacity to produce the 20,000 boxes for the Mixing division. What is the minimum transfer price the Cookie Division should accept for each box of cookies?

a.              $4.00

b.              $1.50

c.              $2.40

d.              $3.20

 

*4.              Landau Gears provides the following cost information related to its production of its primary product:

Per Unit

Variable manufacturing cost$12

Fixed manufacturing cost8

Variable selling and administrative expenses2

Fixed selling and administrative expenses3

Desired ROI per unit7

What is the markup percentage assuming that Landau Gears uses absorption costing?

a.              60%

b.              35%

c.              100%

d.              28%

 

5.              Bride-To-Be produces three-tier wedding cakes. Costs for producing one cake appear below:

Direct materials$11

Direct labor24

Variable overhead16

Fixed overhead14

An outside supplier has offered to produce the cakes for $66 per cake. If Bride-To-Be decides to buy instead of making the cakes, what is the maximum price it would be willing pay?

a.              $65

b.              $66

c.              $51

d.              $35

 

6.              Which one of the following is used to determine the selling price when cost-plus pricing is used?

a.              Selling price = fixed costs + (markup percentage × variable costs)

b.              Selling price = cost + (markup percentage × cost)

c.              Selling price = variable costs + (markup percentage × fixed costs)

d.              Selling price = cost + (markup percentage × variable costs)

 

7.              The following information is provided by Garden Gears for a new product it recently introduced:

Total unit cost$50

Desired ROI per unit$22

Target selling price$72

How much is Garden Gears’ percentage of markup on cost?

a.              44%

b.              55%

c.              30.6%

d.              69.4%

 

 

 

 

 

8.              Target costing assumes

a.              the market price is known and works to achieve an acceptable cost.

b.              the cost is known and works to achieve an acceptable market price.

c.              the desired profit is known and works to achieve an acceptable market price.

d.              the desired profit is known and works to achieve an acceptable cost.

 

9.              The Molding Division of White Corporation manufactures plastic molds and then sells them to customers for $40 per unit. Its variable cost is $15 per unit, and its fixed cost per unit is $5. Management would like the Molding Division to transfer 15,000 of these molds to another division within the company at a price of $23. The Molding Division is operating at full capacity. What is the minimum transfer price the Molding Division should accept?

a.              $23

b.              $20

c.              $40

d.              $25

 

10. Which one of the following is a qualitative factor as it relates to make-or-buy decisions?

a.              The cost to buy the part or product

b.              Loss of customers due to eliminating a product line

c.              Customer perceptions due to a change in pricing

d.              Quality of products from the supplier

 

 

 

 

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