Generally Accepted Accounting Principles and Net Income

1. According to the cost allocation methods used in the company's accounting system that are described in the Production Cost Report, if a company employs 100 PATs at a total labor cost of $15,000,000 (including wages, fringes, incentives, overtime, training, and severance expenses), assembles and ships 800,000 entry-level cameras and 200,000 multi-featured cameras over the course of a year, has revenues of $100 million from sales of entry level cameras, and revenues of $150 million from the sale of multi-featured cameras, then the total annual labor costs allocated to the assembly and shipment of multi-featured cameras and the labor costs per multi-featured camera assembled and shipped, respectively, will be

None of these.

$3,000,000 and $15.00.

$10,000,000 and $50.00.

$5,000,000 and $6.25.

$5,000,000 and $25.00.
2. According to the cost allocation methods used in the company’s accounting system and described in the Help section for the Operations Report for any of the four geographic regions, your company's administrative expenses are

None of the above accurately describe the manner in which the company’s administrative expenses are allocated.

allocated to each of the four geographic regions based on each region’s percentage contribution to total companywide revenues.

allocated to each of the four geographic regions according to their respective percentages of total cameras sold and then allocated between sales of entry-level cameras and multi-featured cameras within each region according to their respective percentages of total cameras sold.

allocated equally to each of the four geographical regions.

allocated between entry-level cameras and multi-featured cameras according to their respective percentages of total companywide revenues.
3. Assume a company’s Income Statement for a given period has the following entries:
Income Statement Data
Quarter 1
(in 000s)
Sales Revenues
$50,000
Production Costs
26,500
Delivery Costs
1,600