Accounting

Topics: Costs, Fixed cost, Variable cost Pages: 54 (18120 words) Published: October 20, 2014
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 the data that are given belowThe total materials handling cost for the year is expected to be 16,486.40.If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost should be allocated to the specialty windows (Round off your answer to the nearest whole dollar.)A.3,266B.9,274C.8,243D.6,595 Activity rate 16,486.40 ( (700 material moves 900 material moves) 10.304 per material moveMaterials handling cost allocated to Specialty Windows 10.304 per material move ( 900 material moves 9,273.60 AACSB AnalyticAICPA BB Critical ThinkingAICPA FN MeasurementBlooms ApplyBrewer - Chapter 03 36Difficulty 3 HardLearning Objective 03-02 Compute activity rates for an activity-based costing system.Learning Objective 03-03 Compute product costs using activity-based costing.Source CMA, adaptedTopic Using Activity-Based Costing 4.Job 731 was recently completed. The following data have been recorded on its job cost sheetThe company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is 14 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 731 would beA.3,288B.5,094C.4,254D.2,418 AACSB AnalyticAICPA BB Critical ThinkingAICPA FN MeasurementBlooms ApplyBrewer - Chapter 02 45Difficulty 1 EasyLearning Objective 02-02 Apply overhead cost to jobs using a predetermined overhead rate.Learning Objective 02-03 Compute the total cost and average cost per unit of a job.Topic Job-Order Costing 5.A proper journal entry to close overapplied manufacturing overhead to Cost of Goods Sold would beA.Option AB.Option BC.Option CD.Option D AACSB Reflective ThinkingAICPA BB Critical ThinkingAICPA FN MeasurementBlooms UnderstandBrewer - Chapter 02 18Difficulty 2 MediumLearning Objective 02-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record costs.Learning Objective 02-07 Compute underapplied or overapplied...
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