Exam Practice

Topics: Variable cost, Costs, Capacity utilization Pages: 3 (654 words) Published: October 28, 2014

1.First Bank had the following activities, traceable costs, and physical flow of driver units:

TraceablePhysical Flow of
Activities CostsDriver Units
Open new accounts$40,0001,000 accounts
Process deposits72,000360,000 deposits
Process withdrawals100,000200,000 withdrawals

The above activities are used by Downtown branch and Uptown branch: DowntownSuburb New accounts200400
Deposits 40,00020,000
Withdrawals 15,00018,000

a.Compute the new account cost assigned to Downtown branch.
b.Compute deposit processing cost assigned to Suburb branch. c.Compute the withdrawal processing cost assigned to Downtown branch. Answer:
a.($40,000 / 1,000) x 200 accounts = $8,000
b.($72,000 / 360,000) x 20,000 = $4,000
c.($100,000 / 200,000) x 15,000 = $7,500
2.Competitive Company had the following total cost:

Direct materials$130,000
Direct labor90,000
Indirect manufacturing80,000
Competitive has two departments, the Winner Department and the Loser Department. The Winner Department incurred 60% of the direct materials cost and 80% of the direct labor cost. Indirect manufacturing costs are assigned in the same proportion as the direct labor cost.

a.Compute the total cost assigned to the Winner Department.
b.Compute the total cost assigned to the Loser Department.
a.($130,000 x 60%) + ($90,000 x 80%) + ($80,000 x 80%) = $214,000 b.($130,000 x 40%) + ($90,000 x 20%) + ($80,000 x 20%) = $86,000 3.Texas Company produces and sells 22,000 units of a single product. Costs associated with this level of production are as follows:

Direct materials $15
Direct manufacturing labor 45
Variable manufacturing overhead 25
Fixed manufacturing overhead 40

The product normally sells for $160 per unit. Texas Company has received a special...
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