63.Refer to the information above. All of the following costs are traceable to a specific factory except: A. Depreciation on the company’s fleet of tractor trailer trucks. B. Direct materials. C. Salaries of production supervisors. D. Wages of production set-up laborers. 64.Refer to the information above. The monthly salaries of the employees of the store’s Accounting Department should be classified as […]
65.Refer to the information above. The return on average investment for this proposed investment is closest to: A. 8 1/3%. B. 50%. C. 25%. D. 11.1%. 66.Refer to the information above. Compute the net present value of this proposed investment, using a discount rate of 12%. (An annuity table shows that the present value of $1 received annually for six years, […]
41. Anton Company spent less than expected for materials and more than expected for labor. Select the incorrect statement from the following. A. It cannot be determined from the information provided whether the company paid a lower purchase price for materials or if workers used less materials. B. It cannot be determined from the information provided whether employees were paid higher wages or if they worked more […]
11.Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold.If the company’s volume increases to 5,000 units, the total cost per unit will be: A. $18.00. B. $20.00. C. $20.50. D. $22.50. 12.Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made […]
83.A company has just received a special, one-time order for 1,000 units. Producing the order will have no effect on the production and sales of other units. The buyer’s name will be stamped on each unit, at a cost of $1.50 per unit. Normal cost data, excluding stamping, follows: Direct materials$10per unit Direct labor16per unit Variable overhead4per unit Allocated fixed overhead12per unit Allocated fixed […]
11) Prepaid rent is a(n) ________. A) expense representing rent used up during the period B) liability representing an obligation to pay for rent C) part of shareholders’ equity D) asset representing rent that has been paid but not used 12) Rent-a-Wreck, Inc. paid $36,000 cash for a two-year insurance policy on April 1, 2011. What adjustment should the company make before […]
129.The comparative balance sheets of Greenvale Games, Inc. show a net decrease in unexpired insurance of $400 and a net decrease in interest payable of $250. In order to reconcile net income with net cash flow from operating activities, net income should be: A. Increased by $650. B. Reduced by $650. C. Increased by $150. D. Reduced by $150. 130.The comparative […]
55.A company’s flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is: A.$34,000. B.$10,000. C.$18,667. D.$16,000. E.$24,000. 56.Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed […]
78.Schrank Company is trying to decide how many units of merchandise to order each month. The company’s policy is to have 20% of the next month’s sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. How many units must be purchased in September? A. 14,000. B. 20,000. C. 22,000. D. 24,000. E. 28,000. […]
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 73) Brown Dental Equipment uses a flexible budget for its indirect manufacturing costs. For 20×1 the company anticipated that it would produce 36,000 components with 7,000 machine hours and 14,400 employee days. The costs and cost drivers were to be as follows: Fixed Variable Cost driver Product handling$30,000$0.20per unit […]
Objective 11.8
1) Top management faces a persistent challenge to make sure that the performance evaluation model of lower level managers is ________.
A) focused on short-term performance
B) based solely on quantitative factors
C) consistent with the decision model
D) based solely on qualitative factors
2) Performance evaluation focuses on responsibility centers for a specific period, not on projects or individual items of equipment over their useful lives.
3) How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.
Objective 11.A
1) Linear programming is a tool that maximizes total contribution margin of a mix of products with multiple constraints.
2) Which of the following is an assumption of linear programming?
A) Average variable costs remain constant throughout the year.
B) Opportunity costs are irrelevant in decision making.
C) Few sunk costs are relevant in decision making.
D) All costs are either variable or fixed for a single cost driver.
3) In linear programming, the goals of management are expressed in ________.
A) an objective function
B) constraints
C) operating policies
D) business functions
4) A mathematical inequality or equality that must be appeased is known as a(n) ________.
A) objective function
B) constraint
C) operating policy
D) business function
5) Computer Products produces two keyboards, Regular and Special. Regular keyboards have a unit contribution margin of $128, and Special keyboards have a unit contribution margin of $720. The demand for Regulars exceeds Computer Product's production capacity, which is limited by available machine-hours and direct manufacturing labor-hours. The maximum demand for Special keyboards is 80 per month. Management desires a product mix that will maximize the contribution toward fixed costs and profits.
Direct manufacturing labor is limited to 1,600 hours a month and machine-hours are limited to 1,200 a month. The Regular keyboards require 20 hours of labor and 8 machine-hours. Special keyboards require 34 labor-hours and 20 machine-hours.
Let R represent Regular keyboards and S represent Special keyboards. The correct set of equations for the keyboard production process is ________.
A) Maximize:$128R + $720S
Constraints:
Labor-hours:20R + 34S ≤ 1,600
Machine-hours:8R + 20S ≤ 1,200
Special:S ≤ 80
S ≥ 0
Regular:R ≥ 0
B) Maximize:$128R + $720S
Constraints:
Labor-hours:20R + 34S ≥ 1,600
Machine-hours:8R + 20S ≥≤ 1,200
Special:S ≥ 80
S ≥ 0
Regular:R ≥ 0
C) Maximize:$720S + $128R
Constraints:
Labor-hours:20R + 8S ≤ 1,600
Machine-hours:34R + 20S ≤ 1,200
Special:S ≤ 80
S ≥ 0
Regular:R ≥ 0
D) Maximize:$128R + $720S
Constraints:
Labor-hours:20R + 34S ≤ 1,600
Machine-hours:8R + 20S ≤ 1,200
Special:S ≥ 80
S ≤ 0
Regular:R ≤ 0
6) In linear programming, a constraint is a mathematical inequality or equality that must be satisfied by the variables in a mathematical model.
7) Local Steel Construction Company produces two products, steel and wood beams. Steel beams have a unit contribution margin of $200, and wood beams have a unit contribution margin of $150. The demand for steel beams exceeds Local Steel Construction Company's production capacity, which is limited by available direct labor and machine-hours. The maximum demand for wood beams is 90 per week. Management desires that the product mix should maximize the weekly contribution toward fixed costs and profits.
Direct manufacturing labor is limited to 3,000 hours a week and 1,000 hours is all that the company's outdated machines can run a week. The steel beams require 120 hours of labor and 60 machine-hours. Wood beams require 150 labor hours and 120 machine-hours.
Required:
Formulate the objective function and constraints necessary to determine the optimal product mix.
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