Question : 96.A firm produces and sells two products, Plus and Max. : 1258698

 

96.A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): 

PlusMax

Units produced20016,000

Batch size (units)10400

Number of setups2040

Direct labor hours per unit55

Total direct labor hours1,00080,000

Cost per setup$1,080

Total setup cost$64,800

With traditional two-stage allocation of overhead costs, using direct labor hours as the allocation base, the setup cost portion of overhead that is allocated to each unit of product for Plus and Max, respectively is:  A. $.80; $.80.

B. $3.20; $3.20.

C. $4.00; $4.00.

D. $160.00; $12,800.00.

E. $200.00; $16,000.00.

97.A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): 

PlusMax

Units produced20016,000

Batch size (units)10400

Number of setups2040

Direct labor hours per unit55

Total direct labor hours1,00080,000

Cost per setup$1,080

Total setup cost$64,800

Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:    

A. $21.60; $.54.

 

B. $54.00; $27.00.

C. $60.00; $60.00.

D. $108.00; $2.70.

E. $200.00; $16,000.00.

98.Rent and maintenance expenses would most likely be allocated based on:    

A. Sales volume by department.

B. Square feet of floor space occupied.

C. Number of hours worked.

D. Number of invoices processed.

E. Number of employees in each department.

99.In the preparation of departmental income statements, the preparer completes the following steps in the following order:    

A. Identify direct expenses; allocate indirect expenses; allocate service department expenses.

B. Identify indirect expenses; allocate direct expenses; allocate service department expenses.

C. Identify service department expenses; allocate direct expenses; allocate indirect expenses.

D. Identify direct expenses, allocate service department expenses; allocate indirect expenses.

E. Allocate all expenses.

100.Marian Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: 

Black DivisionNavy Division

Sales (net)$200,000$400,000

Salary expense28,00048,000

Cost of goods sold100,000159,000

The Black Division occupies 20,000 square feet in the plant. The Navy Division occupies 30,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000. Compute gross profit for the Black and Navy Divisions, respectively.  A. $72,000; $193,000.

B. $172,000; $352,000.

C. $100,000; $241,000.

D. $52,000; $163,000.

E. $72,000; $163,000.

101.Marian Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: 

Black DivisionNavy Division

Sales (net)$200,000$400,000

Salary expense28,00048,000

Cost of goods sold100,000159,000

The Black Division occupies 20,000 square feet in the plant. The Navy Division occupies 30,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000. Compute departmental income for the Black and Navy Divisions, respectively.    

A. $52,000; $163,000.

 

B. $172,000; $352,000.

C. $72,000; $163,000.

D. $72,000; $193,000.

E. $100,000; $241,000.

102.Fallow Corporation has two separate profit centers. The following information is available for the most recent year: 

West DivisionEast Division

Sales (net)$200,000$350,000

Salary expense26,00040,000

Cost of goods sold80,000175,000

The West Division occupies 5,000 square feet in the plant. The East Division occupies 3,000 square feet. Rent, which was $40,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division.    

A. $120,000.

B. $95,000.

C. $94,000.

D. $69,000.

E. $54,000.

103.The amount by which a department’s sales exceed its direct expenses is:    

A. Net sales.

B. Gross profit.

C. Departmental profit.

D. Contribution margin.

E. Departmental contribution to overhead.

104.Departmental contribution to overhead is calculated as the amount of sales of the department less:    

A. Controllable costs.

B. Product and period costs.

C. Direct expenses.

D. Direct and indirect costs.

E. Joint costs.

105.The Menswear Department of Major’s Department Store had sales of $188,000, cost of goods sold of $132,500, indirect expenses of $13,250, and direct expenses of $27,500 for the current period. The Menswear Department’s contribution to overhead as a percent of sales is:    

A. 7.8%.

B. 14.9%.

C. 29.5%.

D. 66.7%.

E. 85.4%.

 

 

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