Author: mfadmin

“The Madison Company produces three products with the following costs and selling prices: Product A B C Selling price per unit $15 $20 $20 Variable cost per unit 8 10 12 Contribution margin per unit $ 7 $10 $ 8 Direct labor hours per unit 1 1.5 2 Machine hours per unit 3.5 2 2.5 103. If Madison has a limit of 15,000 machine hours but no limit on units produced or direct labor hours, then the three products should be produced in the order: a. A, B, C. b. B, C, A. c. A, C, B. d. C, A, B.”,”2. The three products should be produced in the order:Contribution Margin per Machine Hour: A = 15 / 3.5 = 4.29 B = 20 / 2 = 10 C = 20 / 2.5 = 8The three products should be produced in the order: B,C

Managerial Accounting

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“Evans Company is considering rebuilding and selling used alternators for automobiles. The company estimates that the net cash flows (sales less cash operating expenses) arising from the rebuilding and sale of the used alternators would be as follows (numbers in parentheses indicate an outflow): Years 1-10 $100,000 Year 11 (30,000) Year 12 110,000 Evans Company would purchase production equipment costing $275,000 now to use in the rebuilding of the alternators. The equipment would have a 12-year life and a $25,000 salvage value. The company’s cost of capital is 10%. 104. The present value of the net cash flows (sales less cash operating expenses) arising from the rebuilding and sale ofthe alternators (rounded to the nearest dollar) is: a. $602,820. b. $625,980. c. $639,090. d. $660,090.”,”3Present Value of Net Cash Flows= PV of Annuity $100,000 for 10 years at 10%- PV of 30,000 for 10 years at 10% + PV of 110,000 for 12 years= 100,000 x 6.145 = $614,500- 30,000 x 0.350 = (10,500)+ 110,000 x .319 = 35,000Total $639

Managerial Accounting

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“Wilson Company is considering an investment in a machine costing $300,000. The machine has an estimated useful life of seven years at the end of which it will have a salvage value of $15,000. Anticipated yearly revenues associated with the machine amount to $250,000. Yearly costs amount to $150,000. Extra maintenance costs of $60,000 will be incurred at the end of the second and fourth years. 105. The present value of the $15,000 salvage value using a discount rate of 12% is: a. $15,000. b. $7,605. c. $6,780. d. $6,060.”,”3Present Value of Salvage Value: = 15000 x .452 = $6

Managerial Accounting

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“Carlson Manufacturing has some equipment that needs to be rebuilt or replaced. The following information has been gathered relative to this decision: Present Equipment New Equipment Purchase cost new $50,000 $48,000 Remaining book value $30,000 – Cost to rebuild now $25,000 – Major maintenance at the end of 3 years $ 8,000 $ 5,000 Annual cash operating costs $10,000 $ 8,000 Salvage value at the end of 5 years $ 3,000 $ 7,000 Salvage value now $ 9,000 – Carlson uses the total-cost approach and a discount rate of 12% in making capital budgeting decisions. Regardless of which option is chosen, rebuild or replace, at the end of five years Carlson Manufacturing plans to close its domestic manufacturing operations and to move these operations to foreign countries.106. If the new equipment is purchased, the present value of all cash flows that occur now is: a. $(48,000). b. $(39,000). c. $(41,000). d. $(37,000).”,”2If the new machine is purchased the present value of all the cash flows that occur now will equal the price of the new machine minus the selling price of the old machine.$48,000 – $9,000 = $ 39

Managerial Accounting

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29. Which of the following regarding activity-based costing is not true? a. Both departmental overhead rates and activity-based costing rely upon a two-stage allocation process. b. Overhead costing using departmental rates typically utilizes more cost pools than activity-based costing. c. An activity is an event or transaction that acts as a causal factor in the incurrence of cost in an organization. d. Activity-based costing typically will result in more accurate allocation of overhead costs between high-volume and low-volume products.

Managerial Accounting

Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.29. Which of the following[…]

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30. Overhead allocation based on volume alone a. is a key aspect of the activity-based costing model. b. will systematically overcost high-volume products and undercost low-volume products. c. will systematically overcost low-volume products and undercost high-volume products. d. must be used for external financial reporting since an activity-based costing system cannot be designed to generate full product costs for external reporting purposes.

Managerial Accounting

Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.30. Overhead allocation based on[…]

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“32. Which of the following situations would result in activity-based costing not being beneficial to an entity? a. Products differ substantially in volume, lot size, or complexity of manufacture. b. A high statistical correlation exists between direct labor and the incurrence of overhead costs. c. Top management and marketing people use the new data to cost products more accurately and reflect a more approprtate selling price for its products. d. Products differ substantially in their need for various activities such as setups, inspections, and so forth, involved in the manufacturing process.”

Managerial Accounting

Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.“32. Which of the following[…]

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