Accounting

1.Temblador Corporation purchased a machine 7 years ago for 319,000 when it launched product E26T. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 330 machine costing 323,000 or by a new model 230 machine costing 285,000. Management has decided to buy the model 230 machine. It has less capacity than the model 330 machine, but its capacity is sufficient to continue making product E26T. Management also considered, but rejected, the alternative of dropping product E26T and not replacing the old machine. If that were done, the 285,000 invested in the new machine could instead have been invested in a project that would have returned a total of 386,000.In making the decision to buy the model 230 machine rather than the model 330 machine, the sunk cost wasA.319,000B.386,000C.285,000D.323,000 The 319,000 cost of the old machine is a sunk cost. AACSB AnalyticAICPA BB Critical ThinkingAICPA FN Decision MakingBlooms ApplyBrewer - Chapter 01 151Difficulty 1 EasyLearning Objective 01-07 Understand cost classifications used in making decisions differential costs opportunity costs and sunk costs.Topic Cost Classifications for Decision Making 2.Selena Company has two products A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the companys three activity cost pools are as followsThe activity rate under the activity-based costing system for Supporting Customers is closest toA.46.33B.21.67C.65.00D.18.53 Activity rate Estimated overhead cost ( Expected activity 26,000 ( 1,200 21.67 AACSB AnalyticAICPA BB Critical ThinkingAICPA FN MeasurementBlooms ApplyBrewer - Chapter 03 29Difficulty 3 HardLearning Objective 03-02 Compute activity rates for an activity-based costing system.Topic Using Activity-Based Costing 3.The controller of Ferrence Company estimates the amount of materials handling overhead cost that should be allocated to the companys two products using