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COMPLETION STATEMENTS               188.In traditional costing systems, direct labor cost is often used for the assignment of all ____________________.               189.A __________________ is any activity that has a direct cause-effect relationship with the resources consumed.               190.In activity-based costing, overhead costs are allocated to ____________________, then assigned to products.               191.The number of ___________________.
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              98.The following information is available for Wade Corp.: Sales$800,000Total fixed expenses$200,000 Cost of goods sold520,000Total variable expenses480,000 A CVP income statement would report a.gross profit of $280,000. b.contribution margin of $600,000. c.gross profit of $320,000. d.contribution margin of $320,000.               99.Which is the true statement? a.In a CVP income statement, costs and expenses are classified only by function. b.The.
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BRIEF Exercises BE 157 Dollywood Corporation accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 10,000 $30,000 March 9,000 $25,000 February 8,000 $29,000 April 7,500 $26,000 Instructions Compute the variable and fixed cost elements using the high-low method. BE 158 Sandel Company makes 2 products, chairs and tables. Additional information follows: ChairsTables Units3,0002,000 Sales$60,000 $25,000 Variable costs36,0007,000 Fixed costs    9,000    9,000 Net income$15,000$ .
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SHORT-ANSWER ESSAY QUESTIONS S-A E  200 Delany Company uses a traditional costing system.  Management is considering switching to an activity-based costing system. What steps must Delany take in initiating an activity-based costing system? S-A E  201 Feather, Inc. produces phasers (sales of 200,000 units per year) and force field enhancers (sales of 25,000 units.
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Ex. 187 Erickson, Inc. makes student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $255,000. Variable costs are $15 per unit. Instructions (a)Compute break-even sales in dollars using the mathematical equation. (b)Compute break-even sales using the contribution margin ratio. (c)Compute margin of safety ratio assuming actual.
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Ex. 185 Gordon Manufacturing earned net income of $100,000 during 2011. The company wants to earn net income of $40,000 more during 2012. The company's fixed costs are expected to be $105,000, and variable costs are expected to be 30% of sales. Instructions (a)Determine the required sales to meet the target net income.
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148.Cost-volume-profit analysis includes all of the following assumptions except a.the behavior of costs is curvilinear throughout the relevant range. b.costs can be classified accurately as either variable or fixed. c.changes in activity are the only factors that affect costs. d.all units produced are sold. 149.The contribution margin ratio increases when a.fixed costs increase. b.fixed costs decrease. c.variable costs.
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Ex. 173 Determine the missing amounts. ContributionContribution Unit Selling PriceUnit Variable CostsMargin Per UnitMargin Ratio 1.$300$180AB 2.$600C$210D 3.EF$36040% Ex. 174 Henderson Farms reports the following results for the month of November: Sales (10,000 units)$600,000 Variable costs  420,000 Contribution margin180,000 Fixed costs  110,000 Net income$  70,000 Management is considering the following independent courses of action to increase net income. 1.Increase selling price by 10% with no.
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              11.A mixed cost has both selling and administrative cost elements.               12.The fixed cost element of a mixed cost is the cost of having a service available.               13.For planning purposes, mixed costs are generally grouped with fixed costs.               14.The difference between the costs at the high and low levels of.
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Ex. 182 Seasonal Delights manufactures a wide variety of holiday and seasonal decorative items. Seasonal’s activity-based costing overhead rates are: Purchasing$350 per order Storing$2 per square foot/days Machining$100 per machine hour Supervision$5 per direct labor hour The Snow Man project involved three purchase orders, 4,000 square feet/days, 60 machine hours, and 30 direct labor hours. The.
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              31.The activity level is represented by an activity index such as direct labor hours, units of output, or sales dollars.               32.The trend in most companies is to have more variable costs and fewer fixed costs.               33.For purposes of CVP analysis, mixed costs must be classified into their fixed and.
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Ex. 176 In the month of September, Matlock Industries sold 800 units of product. The average sales price was $30. During the month, fixed costs were $7,200 and variable costs were 70% of sales. Instructions (a)Determine the contribution margin in dollars, per unit, and as a ratio. (b)Using the contribution margin technique, compute the.
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Exercises Ex. 172 Hayward Industries manufactures dining chairs and tables. The following information is available: Dining ChairsTablesTotal Cost Machine setups200600$36,000 Inspections250470$54,000 Labor hours2,6002,400 Hayward is considering switching from one overhead rate based on labor hours to activity-based costing. Instructions Perform the following analyses for these two components of overhead: a.Compute total machine setups and inspection costs assigned to each product,.
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MATCHING               199.Match the items in the two columns below by entering the appropriate code letter in the space provided.               A.Pull approach              F.              Just-in-time processing               B.Cost driver              G.              Batch-level activity               C.Facility-level activity              H.              Product-level activity               D.Unit-level activity              I.              Non-value-added activity               E.Activity-based costing              J.              Value-added activity _____              1.Allocates overhead to multiple activity cost.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  206 A cost-volume-profit graph is frequently used in business meetings because it presents a picture of cost relationships within a company. Briefly describe the type of information and data that you would need in order to prepare a CVP graph. After a CVP graph is prepared, what.
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Ex. 184 Taveras Industries developed the following information for the product it sells: Sales price$50 per unit Variable cost of goods sold$23 per unit Fixed cost of goods sold$800,000 Variable selling expense10% of sales price Variable administrative expense$2.00 per unit Fixed selling expense$500,000 Fixed administrative expense$300,000 For the year ended December 31, 2012, Taveras produced and sold 100,000 units.
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Ex. 178 Two of the activity cost pools for Kinney Company are (a) machining ($300,000) and (b) inspections ($42,000). Possible cost drivers are direct labor hours (2,550), machine hours (12,500), square footage (2,000), and number of inspections (200). Instructions Compute the overhead rate for each activity. Ex. 179 Holmes Industries produces two models of televisions,.
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MULTIPLE CHOICE QUESTIONS               38.For an activity base to be useful in cost behavior analysis, a.the activity should always be stated in dollars. b.there should be a correlation between changes in the level of activity and changes in costs. c.the activity should always be stated in terms of units. d.the activity level should be constant.
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COMPLETION STATEMENTS               194.Knowledge of cost behavior is important in ______________________ analysis.               195.A _________________ cost remains constant per unit at every level of activity.               196.Unit fixed costs __________________ with the changes in the level of activity.               197.Total fixed costs are ___________ over various levels of activities, whereas total variable costs __________________.
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              58.Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion? a.Labor specialization b.Overtime wages c.Total variable costs are constant within the relevant range d.Availability of quantity discounts               59.Firms operating at 100% capacity a.are common. b.are the exception rather than the rule. c.have no fixed costs. d.have no variable.
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              48.If a firm increases its activity level, a.costs should remain the same. b.most costs will rise. c.no costs will remain the same. d.some costs will change, others will remain the same.               49.An activity index might be referred to as a cost a.driver. b.multiplier. c.element. d.correlation.               50.Cost activity indexes might help classify costs as a.temporary. b.permanent. c.variable. d.transient.               51.Which of the following.
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Ex. 179 Webber, Inc. developed the following information for its product: Per Unit Sales price$90 Variable cost  54 Contribution margin$36 Total fixed costs$1,260,000 Instructions Answer the following independent questions and show computations using the contribution margin technique to support your answers. 1.How many units must be sold to break even? 2.What is the total sales that must be generated for.
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              88.If a company had a contribution margin of $300,000 and a contribution margin ratio of 40%, total variable costs must have been a.$450,000. b.$180,000. c.$750,000. d.$120,000.               89.Which of the following would not be an acceptable way to express contribution margin? a.Sales minus variable costs b.Sales minus unit costs c.Unit selling price minus unit variable costs d.Contribution margin.
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Ex. 174 Morgan, Player, and Associates, a law firm, employs ABC. The following budgeted data for each of the activity cost pools is provided for the year 2012. EstimatedExpected Use of Activity Cost PoolsOverheadCost Drivers per Activity Researching legal issues$     28,800     900 research hours Meeting with clients  1,760,000  8,800 professional hours Preparing legal documents     480,00030,000 pages During.
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TRUE-FALSE STATEMENTS               1.An activity index identifies the activity that has a causal relationship with a particular cost.               2.A variable cost remains constant per unit at various levels of activity.               3.A fixed cost remains constant in total and on a per unit basis at various levels of activity.               4.If volume increases,.
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Ex. 188 Melody Manufacturing produces a hip-hop CD that is sold for $10. The contribution margin ratio is 40%. Fixed expenses total $7,000. Instructions (a)Compute the variable cost per unit. (b)Compute how many CDs Melody Manufacturing will have to sell in order to break even. (c)Compute how many CDs Melody Manufacturing will have to sell.
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Ex. 178 The income statement for Bradford Machine Company for 2011 appears below. BRADFORD MACHINE COMPANY Income Statement For the Year Ended December 31, 2011 —————————————————————————————————————————— Sales (40,000 units)...........................................$1,000,000 Variable expenses............................................     700,000 Contribution margin...........................................300,000 Fixed expenses..............................................     345,000 Net income (loss).............................................$    (45,000) Instructions Answer the following independent questions and show computations using the contribution margin technique to support your answers: 1.What was the company's.
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108.Fixed costs are $900,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars? a.$2,100,000 b.$2,700,000 c.$3,600,000 d.$1,200,000               109.Fixed costs are $600,000 and the contribution margin per unit is $150. What is the break-even point? a.$1,500,000 b.$4,000,000 c.1,500 units d.4,000 units               110.Nelson Manufacturing has the following data: Variable costs are 60%.
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Ex. 182 Norton, Inc. has the following information available for September 2012. Unit selling price of video game consoles$     400 Unit variable costs$     280 Total fixed costs$54,000 Units sold550 Instructions (a)Prepare a CVP income statement that shows both total and per unit amounts. (b)Compute Norton's breakeven in units. Ex. 183 In the month of April, Avante Salon gave 2,500 haircuts,.
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MATCHING 205.Match the items in the two columns below by entering the appropriate code letter in the space provided.               A.Activity index              F.              Mixed costs               B.Variable costs              G.              Break-even point               C.Fixed costs              H.              Contribution margin               D.High-low method              I.              Margin of safety               E.Relevant range              J.              Contribution margin ratio ____              1.The.
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Ex. 170 Corris Co. accumulates the following data concerning a mixed cost, using miles as the activity level. Miles DrivenTotal Cost January10,000$15,000 February8,00013,500 March9,00014,400 April7,50012,000 Instructions Compute the variable and fixed cost elements using the high-low method. Ex. 171 Moresan Co. gathered the following information on power costs and factory machine usage for the last six months: MonthPower CostFactory Machine Hours January$24,40013,900 February31,30017,600 March29,00016,800 April22,34013,200 May19,90011,600 June14,8006,600 Instructions Using.
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128.Lansbury Manufacturing produces hair brushes. The selling price is $20 per unit and the variable costs are $8 per brush. Fixed costs per month are $4,800. If Lansbury sells 20 more units beyond breakeven, how much does profit increase as a result? a.$240 b.$400 c.$160 d.$800 129.Hayduke Corporation reported the following results from the sale.
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Ex. 191 Englehart, Inc. reports the following operating results for the month of August: Sales $300,000 (units 5,000); variable costs $210,000; and fixed costs $70,000. Management is considering the following independent courses of action to increase net income. 1.Increase selling price by 5% with no change in total variable costs. 2.Reduce variable costs.
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Ex. 180 Werth & Garza Manufacturing's sales slumped badly in 2012 due to so many people purchasing gifts online. The company's income statement showed the following results from selling 500,000 units of product: net sales $2,250,000; total costs and expenses $2,400,000; and net loss $150,000. Costs and expenses consisted of the.
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Ex. 186 Castleman, Inc. designs, prints, and delivers advertising copy for companies throughout the tri-state area. Sometimes this entails designing and printing a single copy and other times multiple copies of the same advertisement. Listed below are typical activity costs: (a)   Printer ink. (b)   Paper (c)    Depreciation on equipment (d)   Machine setup costs (e)   Designing (f)    .
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S-A E  210(Ethics) Hanson, Inc. requires its marketing managers to submit estimated cost-volume-profit data on all requests for new products, or expansions of a product line. Nancy Stephens is a new manager. Her calculations show a fixed cost for a new project at $100,000 and a variable cost of $5. Since the.
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              68.Which of the following is not true about the graph of a mixed cost? a.It is possible to determine the amount of the fixed cost from the graph. b.There is a total cost line on the graph. c.The fixed cost portion of the graph is the same amount at all levels of.
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TRUE-FALSE STATEMENTS               1.The CVP income statement classifies costs as variable or fixed and computes a contribution margin.               2.In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.               3.When a company is in its early stages of operation, its primary goal is to generate a target net income.              .
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              78.Portman Company's activity for the first three months of 2012 are as follows: Machine HoursElectrical Cost January2,100$4,800 February2,600$5,800 March2,900$6,400 Using the high-low method, how much is the cost per machine hour? a.$2.00 b.$3.00 c.$2.26 d.$1.78               79.              Ponszko Nursery used high-low data from June and July to determine its variable cost of $15 per unit. Additional information follows: MonthUnits producedTotal.
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118.Pascal, Inc. is planning to sell 600,000 units for $1.50 per unit. The contribution margin ratio is 20%. If Pascal will break even at this level of sales, what are the fixed costs? a.$180,000. b.$420,000. c.$600,000. d.$720,000.               119.April Industries sells a product with a contribution margin of $12 per unit, fixed costs of $66,000,.
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              21.Both variable and fixed costs are included in calculating the contribution margin.               22.A CVP income statement shows contribution margin instead of gross profit.               23.The break-even point is where total sales equal total variable costs.               24.The break-even point is where total sales equal total variable costs.               25.The break-even point is.
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Exercises Ex. 167 Sandburg Manufacturing manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for the production of 2,000 units. The Utilities and Maintenance are mixed costs. The fixed portions of these costs are $200 and $300, respectively.       Costs Incurred       Production in Units   2,000 3,000 Production Costs a.Direct Materials$  4,000? b.Direct Labor16,000? c.Utilities1,200? d.Rent3,000? e.Indirect.
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Ex. 168 Bill Braddock is considering opening a Fast ‘n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $6,000, Depreciation on equipment $7,000, Wages $25,200, Motor oil $2.00 per quart. He estimates that each oil change will require 5.
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