Question : 13) Which of the following regarded as a purpose of : 1211819

 

13) Which of the following is regarded as a purpose of cost allocation?

A) It helps in identifying the potential customers for a product.

B) It provides the profit margin earned.

C) It helps in maintaining decorum among managers.

D) It provides information for economic decisions.

 

14) A price-bidding decision for a one-time-only special order includes an analysis of all ________.

A) manufacturing costs

B) cost drivers related to the product

C) direct and indirect variable costs of each function in the value chain

D) fixed manufacturing costs

 

15) In a long-run, it is worthwhile to sell a product only if the selling price exceeds ________.

A) direct costs of the product

B) manufacturing costs of the product

C) fixed cost of the product

D) full cost of the product and a markup

16) Purple Trees manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $240 per table, consisting of 60% variable costs and 40% fixed costs. The company has surplus capacity available. It is Purple Trees’ policy to add a 75% markup to full costs.

 

Purple Trees is invited to bid on a one-time-only special order to supply 100 rustic tables. What is the lowest price Purple Trees should bid on this special order?

A) $7,200

B) $12,000

C) $14,400

D) $42,000

 

Answer the following questions using the information below:

 

Weather Inc., manufactures single room sized air conditioners. The cost accounting system estimates manufacturing costs to be $190 per air conditioner, consisting of 75% variable costs and 25% fixed costs. The company has surplus capacity available. It is Weather Inc.’s policy to add a 30% markup to full costs.

 

17) Weather Inc., is invited to bid on a one-time-only special order to supply 100 air conditioners. What is the lowest price Weather Inc. should bid on this special order?

A) $14,250

B) $18,525

C) $25,000

D) $24,700

 

18) A medium sized motel chain is currently expanding and has decided to create more rooms and air condition all of its rooms, which are currently not air conditioned. Weather Inc. is invited to submit a bid to the motel chain. What per unit price will Weather Inc. most likely bid for this special order of 200 units? Assume that the price is being fixed for a long-term commitment. 

A) $190.00 per unit

B) $142.50 per unit

C) $247.00 per unit

D) $230.00 per unit

19) Zolas’ Heaters is approached by Ms. Leila, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Zolas’ Heaters has excess capacity. The following per unit data apply for sales to regular customers:

 

Direct materials$400

Direct manufacturing labor120

Variable manufacturing support60

Fixed manufacturing support200

Total manufacturing costs780

Markup (20% of total manufacturing costs)156

Estimated selling price$936

 

For Zolas’ Heaters, what is the minimum acceptable price of this one-time-only special order?

A) $580

B) $780

C) $520

D) $1,014

 

Answer the following questions using the information below:

 

Golden Generator Supply is approached by Mr. Stephen, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Golden Generator Supply has excess capacity. The following per unit data apply for sales to regular customers:

 

Direct materials$1,700.00

Direct manufacturing labor100.00

Variable manufacturing support200.00

Fixed manufacturing support150.00

Total manufacturing costs2,150.00

Markup (30% of total manufacturing costs)645.00

Estimated selling price$2,795.00

 

20) For Golden Generator Supply, what is the minimum acceptable price of this one-time-only special order?

A) $1,800

B) $2,000

C) $2,150

D) $2,580

21) If Golden Generator Supply accepts the order at $2,350, what is the amount contributed towards fixed costs and profit on a sales order of 1,000 units?

A) $200,000

B) $350,000

C) $795,000

D) $1,000,000

 

Answer the following questions using the information below:

 

Gracius Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Gracius Manufacturing has a policy of adding a 10% markup to full costs and currently has excess capacity. The following per unit data apply for sales to regular customers:

 

Variable costs:

Direct materials$30

Direct labor10

Manufacturing overhead20

Marketing costs10

Fixed costs:

Manufacturing overhead100

Marketing costs20

Total costs190

Markup (10% of total costs)19

Estimated selling price$209

 

22) For Gracius Manufacturing, what is the minimum acceptable price of this one-time-only special order?

A) $40

B) $60

C) $70

D) $190