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ACCT 434 Advanced Cost Management

ACCT 434 Week 1 Quiz (2 Versions)


ACCT 434 Week 1 DQ 1 ABC Journey
ACCT 434 Week 1 DQ 2 Workout Room
ACCT 434 Week 2 Quiz (2 Versions)
ACCT 434 Week 2 DQ 1 Flexible versus Static Budgets
ACCT 434 Week 2 DQ 2 Workout Room
ACCT 434 Week 3 Quiz
ACCT 434 Week 3 DQ 1 Relevant Costs
ACCT 434 Week 3 DQ 2 Workout Room
ACCT 434 Week 4 DQ 1 Accounting for Primary Products
ACCT 434 Week 4 DQ 2 Workout Room
ACCT 434 Week 4 Midterm Exam (2 Versions)
ACCT 434 Week 5 Quiz (2 Versions)
ACCT 434 Week 5 DQ 1 Pricing Decision
ACCT 434 Week 5 DQ 2 Workout Room
ACCT 434 Week 6 Quiz (2 Versions)
ACCT 434 Week 6 DQ 1 Evaluating Managers
ACCT 434 Week 6 DQ 2 Workout Room
ACCT 434 Week 7 Quiz (2 Versions)
ACCT 434 Week 7 DQ 1 Quality and Performance
ACCT 434 Week 7 DQ 2 Workout Room
ACCT 434 Week 8 Final Exam
ACCT 434 Coursework Week 1 - 8 (Quizzes, Discussions, Midterm, Final Exam)
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ACCT 434 All Discussion Questions Week 1 - 7
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ACCT 434 All Quiz Solutions Week 1 - 7 (View Questions Below)
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ACCT 434 Week 1 Quiz - Price $ 15

1. Question : (TCO 1) The average cost data are for In-Sync Fixtures Company's (a retailer) only two product lines,
Marblette and Italian MarbleCurrently, In-Sync Fixtures uses a traditional costing system with indirect costs
allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of its
receiving costs of $40,000. It realizes that the Italian Marble is heavier and requires more care than the Marblette but
that the Marblette comes in larger volume. Which statement can be made using the results of the activity analysis
performed.?
2. Question : (TCO 1) The allocation of indirect costs in an activity-based costing system
3. Question : (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a
lower price would best fit which category of management decisions under activity-based management?
4. Question : (TCO 1) A company produces three products; if one product is overcosted then
5. Question : (TCO 1) To set realistic selling prices
6. Question : (TCO 1) Different products consume different proportions of manufacturing overhead costs because
of differences in all of
7. Question : (TCO 1) A well-designed, activity-based cost system helps managers make better decisions because
information derived from an ABC
8. Question : (TCO 1) Companies use ABC system information to
9. Question : (TCO 1) For service organizations that bill customers at a predetermined average rate, activity-based
cost systems can help to
10. Question : (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of
inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the
budgeted indirect cost allocation rate for this activity?

ACCT 434 Week 2 Quiz - Price $ 20


(Version 1)
1. Question : (TCO 2) Operating budgets and financial budgets
2. Question: (TCO 2) To gain the benefits of budgeting, __must understand and support the budget.
3. Question : (TCO 2) Which budget is not necessary to prepare the budgeted balance sheet?
4. Question : (TCO 2) A feature of a standard-costing system is that the costs of every product or service planned to
be worked on during the period can be computed at the start of that period. This feature of standard costing makes it
possible to
5. Question : (TCO 2) An unfavorable variance indicates that
6. Question : (TCO 2) Which of the following statements is true about overhead cost variance analysis using
activity-based costing?
7. Question : (TCO 2) Overhead costs have been increasing due to all of the following except
8. Question : (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000
units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating
income $150,000. Katie is developing the 20X9 budget. In 20X9, the company would like to increase selling prices
by 4%, and as a result expects a decrease in sales volume of 10%.............?
9. Question : (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and
ending inventory levels (in units)If Hester Company plans to sell 600,000 units during the 2008-2009 fiscal
year, the number of units it would have to manufacture..
10. Question : (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following
table:.................Management estimates that 5% of credit sales are not collectible. Of the credit sales that are

collectible, 60% are collected in the month of sale and the remainder in the month........
(Version 2)
1. Question : (TCO 2) Benchmarking is
2. Question : (TCO 2) To gain the benefits of budgeting, ________ must understand and support the budget.
3. Question : (TCO 2) Which budget is not necessary to prepare the budgeted balance sheet?
4. Question : (TCO 2) A flexible budget
5. Question : (TCO 2) An unfavorable variance indicates that
6. Question : (TCO 2) Which of the following statements is true about overhead cost variance analysis using
activity-based costing?
7. Question : (TCO 2) Overhead costs have been increasing due to all of the following except
8. Question : (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000
units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating
income $150,000. Katie is developing the 20X9 budget. In 20X9,..........?
9. Question : (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and
ending inventory levels (in units) are planned for the fiscal year of July 1, 2008, through June 30, 2009.
of units it would have to manufacture during the year would be
10. Question : (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following
table: .Management estimates that 5% of credit sales are not collectible. Of the credit sales that are
collectible, 60% are collected in the month of sale...........

ACCT 434 Week 3 Quiz - Price $ 15


1. Question : (TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the
rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified?
2. Question : (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the
wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected
to be produced in the coming year. What cost function best represents these costs?
3. Question : (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions
based on past data?
4. Question : (TCO 3) Penny's TV and Appliance Store is a small company that has hired you to perform some
management advisory services. The following information pertains to 20X8 operations: Sales (2,000 televisions)
$900,000; Cost of goods sold $400,000; Store manager's salary per year $70,000; Operating costs per year
$157,000; Advertising and promotion per year $15,000; Commissions (4% of sales) $36,000. What are the estimated
total costs if Penny's expects to sell 3,000 units next year?
5. Question : (TCO 4) The formal process of choosing among alternatives is known as a(n)
6. Question : (TCO 4) When using the five-step decision process, which one of the following steps should.?
7. Question : (TCO 4) Sunk costs
8. Question : (TCO 4) Northwoods Incorporated manufactures rustic furniture. The cost accounting system
estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The
company has surplus capacity available. It is Northwoods' policy to add a 50% markup to full costs. A large hotel
chain is currently expanding and has decided to decorate all new hotels using the rustic style. Northwoods is invited
to submit a bid to the hotel chain. What is the lowest price per unit Northwoods should bid on this long-term order?
9. Question : (TCO 5) Throughput contribution equals revenues minus
10. Question : (TCO 5) A machine has been identified as a bottleneck and the source of the constraint for a

manufacturing company that has multiple products and multiple machines. One way the company can overcome the
bottleneck is

ACCT 434 Week 5 Quiz - Price $ 20


(Version 1) 1. Question : (TCO 7) Major influences of competitors, costs, and customers on pricing decisions are
factors of
2. Question : (TCO 7) The first step in implementing target pricing and target costing is
3. Question : (TCO 7) The markup percentage is usually higher if the cost base used is
4. Question : (TCO 7) An understanding of life-cycle costs can lead to
5. Question : (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed
costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a
20% markup to full cost. How much should the selling price be per unit for 300,000 units?
6. Question : (TCO 8) A product may be passed from one subunit to another subunit in the same organization. The
product is known as
7. Question : (TCO 8) Transfer prices should be judged by whether they promote
8. Question : (TCO 8) When an industry has excess capacity, market prices may drop well below their historical
average. If this drop is temporary, it is called
9. Question : (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that
10. Question : (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $20 per unit.
Outlay cost is $4. What is the opportunity cost, assuming the seller sells internally?
(Version 2) 1. Question : (TCO 7) When companies do not want to use market prices or find it too costly, they
typically use __________ prices, even though suboptimal decisions may occur.
2. Question : (TCO 7) The first step in implementing target pricing and target costing is
3. Question : (TCO 7) The amount of markup percentage is usually higher if
4. Question : (TCO 7) An understanding of life-cycle costs can lead to
5. Question : (TCO 7) Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed
costs total $1,500,000, allocated on the basis of the number of units produced. Selling price is computed by adding a
20% markup to full cost. How much should the selling price be per unit for 300,000 units?
6. Question : (TCO 8) A benefit of using a market-based transfer price is
7. Question : (TCO 8) A transfer-pricing method leads to goal congruence when managers
8. Question : (TCO 8) When an industry has excess capacity, market prices may drop well below their historical
average. If this drop is temporary, it is called
9. Question : (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that
10. Question : (TCO 8) Division A sells soybean paste internally to Division B, which in turn, produces soybean
burgers that sell for $5 per pound. Division A incurs costs of $0.75 per pound while Division B incurs?

ACCT 434 Week 6 Quiz - Price $ 15


1. Question : (TCO 9) To guide cost allocation decisions, the benefits-received criterion
2. Question : (TCO 9) A challenge to using cost-benefit criteria for allocating costs is that
3. Question : (TCO 9) The MOST likely reason for NOT allocating corporate costs to divisions include that
4. Question : (TCO 9) Identifying homogeneous cost pools
5. Question : (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a
$20,000,000 bond issuance, the electric mixer division used $14,000,000 and the electric lamp division used

$6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs
should be allocated to the electric lamp division?
6. Question : (TCO 10) All of the following are methods that aid management in analyzing the expected results of
capital budgeting decisions EXCEPT the
7. Question : (TCO 10) Assume your goal in life is to retire with $1.5 million. How much would you need to save
at the end of each year if interest rates average 5% and you have a 25-year work life?
8. Question : (TCO 10) The definition of an annuity is
9. Question : (TCO 10) A "what-if" technique that examines how a result will change if the original predicted data
are not achieved or if an underlying assumption changes is called
10. Question : (TCO 10) Shirt Company wants to purchase a new cutting machine for its sewing plant. The
investment is expected to generate annual cash inflows of $300,000. The required rate of return is 12% and the
current machine is expected to last for four years. What is the maximum dollar amount Shirt Company would be
willing to spend for the machine, assuming its life is also four years? Income taxes are not considered.

ACCT 434 Week 7 Quiz - Price $ 20


1. Question : (TCO 11) The four cost categories in a cost of quality program are
2. Question : (TCO 11) ________ is a formal means of distinguishing between random and nonrandom variation in
an operating process.
3. Question : (TCO 11) Delays in customer-response time occur because of
4. Question : (TCO 11) Scrap is an example of
5. Question : (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to
automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require
$18,000 in training costs and $120,000 in annual..?
6. Question : (TCO 12) Which of the following categories of costs are important when managing inventories of
goods for sale, according?
7. Question : (TCO 12) Quality costs include
8. Question : (TCO 12) Which of the following is an assumption of the economic-order-quantity decision model?
9. Question : (TCO 12) Increases in the carrying cost and decreases in the ordering cost per purchase order result in
10. Question : (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag
display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to
initiate a production run is $50. There are no flag displays on hand but Liberty had scheduled 60 equal production
runs of the display sets for the coming year, the first of which is to be run immediately..........

ACCT 434 Week 4 Midterm Package (2 Different Versions)


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ACCT 434 Week 4 Midterm (Versions 1) - Price $ 29
Page: 1
1. Question: (TCO1) ABC systems create
2. Question: (TCO 1) Merriamn Company provides the following ABC..How much of the account billing cost will
be assigned to Department B?
3. Question: (TCO 2) A master budget
4. Question: (TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of

inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted
indirect cost allocation rate for this activity?
5. Question: (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed,
or mixed using qualitative methods?
6. Question: (TCO 4) In evaluating different alternatives, it is useful to concentrate on
7. Question: (TCO 5) The theory of constraints is used for cost analysis when
8. Question: (TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products.
The costs associated with the production of 10,000 units of this part are as follows:..midt Corporation
for $18 per unit. Assuming there is no other use for the facilities, Schmidt should
9. Question: (TCO 3) The cost function y = 100 + 10X
10. Question: (TCO 4) Sunk costs
Page: 2
1. Question : (TCO 1) For each of the following drivers identify an appropriate activity. a. # of machines b. # of
setups c. # of inspections d. # of orders e. # of runs f. # of bins or aisles g. # of engineers
2. Question : (TCO 2) Favata Company has the following information:In addition, the cost of goods
sold rate is 70% and the desired inventory level is 30% of next month's cost of sales. Prepare a purchases budget for
July through September.
3. Question : (TCO 3) Patrick Ross, the president of Ross's Wild Game Company, has asked for information about
the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed
and how much is variable. The following data are the only records available:Using the high-low
method, determine the overhead cost equation. Use machine-hours as your cost driver.
4. Question : (TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items
are produced, the costs per unit are: . units of the part for $6.00 per unit. The plant facilities could be used
to manufacture another item at a savings of $9,000 if Kirkland accepts the offer. In addition, $1.00 per unit of fixed
manufacturing overhead on the original item would be eliminated. a. What is the relevant per unit cost for the
original part? b. Which alternative is best for Kirkland Company? By how much?
5. Question : (TCO 1) For each of the following drivers identify an appropriate activity. a. # of machines b. # of
setups c. # of inspections d. # of orders e. # of runs f. # of bins or aisles g. # of engineers
6. Question : (TCO 2) Favata Company has the following information: In addition, the cost of goods
sold rate is 70% and the desired inventory level is 30% of next month's cost of sales. Prepare a purchases budget for
July through September.
7. Question : (TCO 3) Patrick Ross, the president of Ross's Wild Game Company, has asked for information about
the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed
and how much is variable. The following data are the only records available: Using the high-low
method, determine the overhead cost equation. Use machine-hours as your cost driver.
8. Question : (TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items
are produced, the costs per unit are: Mike Company has offered to sell to Kirkland Company 10,000 units
of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if
Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be
eliminated. a. What is the relevant per unit cost for the original part? b. Which alternative is best for Kirkland
Company? By how much?

ACCT 434 Week 4 Midterm (Versions 2) - Price $ 29

1. Question : (TCO 1) Which of the following is a sign that an ABC system may be useful?
2. Question : (TCO 1) Merriamn Company provides the following ABC.....:........How much of the account billing
cost will be assigned to Department B?
3. Question : (TCO 2) Budgeting provides all of the following EXCEPT
4. Question : (TCO 2) White planned to use $82 of material per unit but actually used $80 of material per unit, and
planned to make 1,200 units but actually made 1,000 units. The flexible-budget variance is
5. Question : (TCO 3) The conference method estimates cost functions
6. Question : (TCO 4) In evaluating different alternatives, it is useful to concentrate on
7. Question : (TCO 5) Producing more nonbottleneck output
8. Question : (TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products.
The costs associated with the production of 10,000 units of this part are as follows: ..
Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming
there is no other use for the facilities, Schmidt should
9. Question : (TCO 3) The cost components of an air conditioner include $35 for the compressor, $11.50 for the
sheet-molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The
company expects to produce 1,500 air....... What cost function best represents these costs?
10. Question : (TCO 1) For each of the following activities, identify an appropriate activity-cost driver. a. machine
maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense
g. engineering design
11. Question : (TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-month period
Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both
pounds and dollars for each month.
12. Question : (TCO 3) As part of his job as cost analyst, Max Thompson collected the following information
concerning the operations of the Machining Department: .Use the high-low method to determine the
estimating cost function with machine-hours as the cost driver.
13. Question : (TCO 5) Collier Bicycles has been manufacturing its own wheels for its bikes. The company is
operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of
direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $1.50 and $1.80,
respectively. Normal production is 200,000 wheels per year. A supplier offers to make the wheels at a price of $4
each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated, but the $42,000
of fixed manufacturing overhead being charged to the wheels will have to be absorbed by other products. a. Prepare
an incremental analysis for the decision to make or buy the wheels. b. Should Collier Bicycles buy the wheels from
the outside supplier? Justify your answer.
14. Question : (TCO 1) For each of the following activities, identify an appropriate activity-cost driver. a. machine
maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense
g. engineering design
15. Question : (TCO 2) Lubriderm Corporation has the following budgeted sales for the next six-month period
.. Prepare a purchases budget in pounds for July, August, and September, and give total purchases
in both pounds and dollars for each month.
16. Question : (TCO 3) As part of his job as cost analyst, Max Thompson collected the following information
concerning the operations of the Machining Department: Observation Machine-hours Total Operating Costs January
4,000 $45,000 February 4,600 49,500 March 3,800 45,750 April 4,400 48,000 May 4,500 49,800 Use the high-low
method to determine the estimating cost function with machine-hours as the cost driver.
17. Question : (TCO 4) Sunk costs Answer; Are past costs.

ACCT 434 Week 8 Final Exam


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1. (TCO 1) If products are alike, then for costing purposes (Points : 5)
2. (TCO 1) Ireland Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray
nozzle is $180,000. The budgeted number of nozzles to be inserted is 80,000. What is the budgeted indirect cost
allocation rate for this activity? (Points : 5)
3. (TCO 2) Fixed overhead costs include (Points : 5)
4. (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table:
Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible,
75% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of
inventory each month are 80% of the next(Points : 5)
5. (TCO 2) Budgeting provides all of the following EXCEPT (Points : 5)
6. (TCO 3) The cost function y = 1,000 + 5X (Points : 5)
7. (TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed
using qualitative methods? (Points : 5)
8. (TCO 4) Sunk costs (Points : 5)
9. (TCO 5) In the theory of constraints, the only direct costs are (Points : 5)
10. (TCO 5) Keeping the bottleneck operation busy and subordinating allnonbottleneck operations to the bottleneck
operation involves (Points : 5
11. (TCO 6) What type of cost is the result of an event that results in more than one product or service
simultaneously? (Points : 5)
12. (TCO 6) Which of the following is a disadvantage of the physical-measure method of allocating joint costs?
(Points : 5)
13. (TCO 7) An understanding of life-cycle costs can lead to (Points : 5)
14. (TCO 7) Each month, Haddon Company has $300,000 total manufacturing costs (20% fixed) and $125,000
distribution and marketing costs (75% fixed). Haddon's monthly sales are $600,000. The markup percentage on full
cost to arrive at the target (existing) selling price is (Points : 5)
15. (TCO 8) The costs used in cost-based transfer prices (Points : 5)
16. (TCO 8) The seller of Product A has no idle capacity and can sell all it can produce at $25 per unit. Outlay cost
is $10. What is the opportunity cost, assuming the seller? (Points : 5)
17. (TCO 8) When companies do not want to use market prices or find it too costly, they typically use ________
prices, even though suboptimal decisions may occur. (Points : 5)
18. (TCO 9) To guide cost allocation decisions, the benefits-received criterion (Points : 5)
19. (TCO 9) The Hassan Corporation has an electric mixer division and an electric lamp division. Of a $50,000,000
bond issuance, the electric mixer division used $24,000,000 and the electric lamp division used $26,000,000 for
expansion. Interest costs on the bond totaled $1,500,000 for the year. What amount of interest costs should be
allocated to the electric lamp division? (Points : 5)

20. (TCO 10) A "what-if" technique that examines how a result will change if the original predicted data are not
achieved or if an underlying assumption changes is called (Points : 5)
21. (TCO 10) Shirt Company wants to purchase a new cutting machine for its sewing plant. The investment is
expected to generate annual cash inflows of $500,000. The required rate of return is 12% and the current machine is
expected to last for four years. What is the maximum dollar amount Shirt Company would be willing to spend for
the machine, assuming its life is also four.. (Points : 5)
22. (TCO 11) The four cost categories in a cost of quality program are (Points : 5)
23. (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a
portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in
training costs and $120,000 in annual equipment costs. Management is willing to adjust the budget for an amount up
to the cost of the new equipment. The budgeted production level is 200,000 units. Appraisal costs for the year are
budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure.
? (Points : 5)
24. (TCO 12) The costs associated with storage are an example of which..? (Points : 5)
25. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is
estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a
production run is $100. There are no flag displays on hand but Liberty had scheduled 70 equal production runs of
the display sets for the coming. (Points : 5)
26. (TCO 2) Russell Company has the following projected account balances for June 30, 20X9:
.Prepare a budgeted income statement AND a budgeted balance sheet as of June 30,
20X9. (Points : 25)
27. (TCO 5) Steven's Medical Equipment Company manufactures hospital beds. Its most popular model, Deluxe,
sells for $5,000. It has variable costs totaling $2,800 and fixed costs of $1,000 per unit, based on an average
production run of 5,000 units. It normally has four production runs a year, with $600,000 in setup costs each time.
Plant capacity can handle up to six runs a year for a total of 30,000 beds. A competitor is introducing a new hospital
bed similar to Deluxe that will..? (Points : 25)
28. (TCO 7) Dulce Greeting Cards Incorporated is starting a new business venture and is in the process of
evaluating its product lines. Information for one new product, traditional parchment grade cards, is as follows: For
16 times each year, a new card design will be put into production. Each new design will require $300 in setup costs.
The parchment grade card product line incurred $75,000 in development costs and is expected to be produced over
the next four years. (Points : 25)
29. (TCO 8) Novacar Company manufactures automobiles. The red car division sells its red cars for $25,000 each to
the general public. The red cars have manufacturing costs of $12,500 each for variable and $5,000 each for fixed
costs. The division's total fixed manufacturing costs are $25,000,000 at the normal volume of 5,000 units.
. (Points : 25)
30. (TCO 11) For supply item LK, Boatman Company has been ordering 125 units based on the recommendation of
the salesperson who calls on the company monthly. The company has hired a new purchasing agent, who wants to
start using the economic-order-quantity method and its supporting decision elements. She has gathered the following

information:Determine the EOQ, average inventory, orders per year, average daily demand, reorder
point, annual ordering costs, and annual carrying costs. (Points : 25)

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