Question : 89.Sweet Cocoa produces chocolate syrup used by candy companies. Recently, : 1302767

 

 

89.Sweet Cocoa produces chocolate syrup used by candy companies. Recently, the company has had excess capacity due to a foreign supplier entering its market. Sweet Cocoa is currently bidding on a potential order from Kilwin’s 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 cost of $600,000, composed 40% of variable costs and 60% of fixed costs. The largest fixed cost relates to depreciation of plant and equipment. Should Sweet Cocoa bid on the Kilwin’s Candy business at $21 per case?

A.No, because the incremental loss will be $6.50 per case

B.Yes, because the incremental profit will be $1.00 per case

C.No, because there are too many qualitative considerations

D.Yes, because the incremental profit will be $10 per case

 

90.Maintenance costs at Sturgeon Company are allocated to the production departments based on area occupied. Maintenance costs of $300,000 are budgeted to maintain a 60,000 square foot production area. If the finishing department occupies 25,000 square feet, how much of the maintenance department costs will be allocated to the finishing department?

A.$125,000

B.$175,000

C.$100,000

D.$5,000

 

91.Dewey, Cheatham, and How, Attorneys-at-Law, specialize in three areas: criminal, civil, and family law. When specifications for a new IT system were established, the partners agreed to allocate fixed costs based on gigabytes needed by each department. The criminal law division needed 40% of the capacity, civil law needed 35%, and family law needed 25%. Variable costs for the IT department are allocated on the amount of bandwidth used by each division used. The IT department’s budgeted monthly fixed costs are $640,000, and the budgeted monthly variable costs are $160,000. The firm estimates that 8,000,000 gigabytes of computer time will be used in June. The criminal law division actually used 3,040,000 gigabytes of bandwidth during June. How much fixed IT costs will be allocated to the criminal law division during June?

A.$256,000

B.$240,000

C.$512,000

D.None of these answer choices are correct.

 

92.Dewey, Cheatham, and How, Attorneys-at-Law, specialize in three areas: criminal, civil, and family law. When specifications for a new IT system were established, the partners agreed to allocate fixed costs based on gigabytes needed by each department. The criminal law division needed 40% of the capacity, civil law needed 35%, and family law needed 25%. Variable costs for the IT department are allocated on the amount of bandwidth used by each division used. The IT department’s budgeted monthly fixed costs are $640,000, and the budgeted monthly variable costs are $160,000. The firm estimates that 8,000,000 gigabytes of computer time will be used in June. During June, the family law division used 1,900,000 gigabytes of bandwidth. How much are total variable IT costs to be allocated to the family law division during June? Compute cost allocation rates to 3 significant digits.

A.$160,000

B.$60,000

C.$40,000

D.$38,000

 

93.Dewey, Cheatham, and How, Attorneys-at-Law, specialize in three areas: criminal, civil, and family law. When specifications for a new IT system were established, the partners agreed to allocate fixed costs based on gigabytes needed by each department. The criminal law division needed 40% of the capacity, civil law needed 35%, and family law needed 25%. Variable costs for the IT department are allocated on the amount of bandwidth used by each division used. The IT department’s budgeted monthly fixed costs are $640,000, and the budgeted monthly variable costs are $160,000. The firm estimates that 8,000,000 gigabytes of computer time will be used in June. The criminal law division actually used 3,040,000 gigabytes of bandwidth during June. The family law division used 2,100,000 and the civil law division used 3,100,000 gigabytes of bandwidth during June. What amount of the IT fixed costs will be allocated to the civil law division during June? (Compute cost allocation rates to 3 significant digits.)

A.$224,000

B.$248,000

C.$241,984

D.None of these answer choices are correct.

 

94.Dragon Fire Hot Sauce makes two types of hot sauces—meek and mild. Budgeted information for the two flavors appears below:

 

 

MeekMild

Sales              $600,000              $400,000

Direct materials              $100,000              $120,000

Direct labor cost              $108,000              $180,000

Labor hourly cost              $12.00              $12.00

 

The company estimates it will incur $345,600 in overhead costs for the period. Dragon Fire allocates overhead cost to products based on the labor hours worked on each product. What is the overhead application rate to be used when allocating to Meek?

               $14.40

               $1.20

               $3.20

               None of these answer choices are correct.

 

95.Manufacturing overhead is allocated to products based on the number of machine hours required. In a year when 40,000 machine hours and 60,000 direct labor hours were anticipated, indirect costs were budgeted at $252,000. If production of wagons requires 9,000 machine hours and 10,800 direct labor hours, how much manufacturing overhead will be allocated to wagons?

A.$45,360

B.$56,700

C.$2,268

D.$28

 

96.Dragon Fire Hot Sauce makes two types of hot sauces—meek and mild. Budgeted information for the two flavors appears below:

 

 

MeekMild

Sales              $600,000              $400,000

Direct materials              $100,000              $120,000

Direct labor cost              $108,000              $180,000

Labor hourly cost              $12.00              $12.00

 

The company estimates it will incur $345,600 in overhead costs for the period. Dragon Fire allocates overhead cost to products based on the labor hours worked on each product. How much is the total overhead applied to Meek?

                                        $130,500

                                        $129,600

                                        $1,566

D.$348,000

 

97.The production departments at Windsor Parke occupy a total area of 50,000 square feet. Heating costs total $600,000 and are allocated based on the area that each department occupies. The finishing department occupies 30,000 square feet and the packaging department occupies 20,000 square feet. What amount of heating cost will be allocated to the finishing and packaging departments, respectively?

A.$360,000 and $240,000

B.$300,000 and $300,000

C.$36,000 and $24,000

D.$32,727 and $21,818

98.Dragon Fire Hot Sauce makes two types of hot sauces—meek and mild. Budgeted information for the two flavors appears below:

 

 

MeekMild

Sales              $600,000              $400,000

Direct materials              $100,000              $120,000

Direct labor cost              $108,000              $180,000

Labor hourly cost              $12.00              $12.00

 

The company estimates it will incur $345,600 in overhead costs for the period. Dragon Fire allocates overhead cost to products based on the labor cost incurred. How much overhead is assigned to Mild?

A.$216,000

B.$28,800

C.$56,250

D.None of these answer choices are correct.