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Managerial Midterm
Managerial Midterm
Managerial Midterm
The controller of Hall Industries has collected the following monthly expense data for use
in analyzing the cost behavior of maintenance costs
Total Total
Month Maintenance Costs Machine Hours
Answer:
i.e [Total cost at highest level -Total cost at lowest level] / (Highest level-Lowest level)
= ($4,620-$2,640) / (8,000-3,500)
Apply above equation for june month to calculate fixed cost component
= $4,620-(8,000hrs*$0.44)
Question 02:
Pure Decorating uses a job order cost system to collect the costs of its interior decorating
business. Each client's consultation is treated as a separate job. Overhead is applied to each
job based on the number of decorator hours incurred. Listed below are data for the
current year
Answer:
= 960000/40000
b. Determined whether the overhead was under or over applied and by how much
Since actual overhead is greater than applied overhead Pure Decorating has under applied
overhead for the year by:
Under applied overhead = Actual - Applied
Under applied overhead = $982800 - 960000
Under applied overhead = $22,800
Question 03:
All Wood Corporation manufactures dining chairs and tables. The following information is avail
able:
All Wood is considering switching from one overhead rate based on labor hours to activity-
based costing. Perform the following analyses for these two components of overhead:
a. Compute total machine setups and inspection costs assigned to each product, using a sing
le overhead rate.
b. Compute total machine setups and inspection costs assigned to each product, using activit
y-based costing.
Answer:
$90,000
b. Activity-based costing
$90,000
Question 04
In the month of March, Style Salon services 560 clients at an average price of $ 120.
During the month, fixed costs were $ 21,024 and variable costs were 60 % of sales.
Answer
= $ 67,200
= $ 40,320
= $ 26,880
Number of Units = 560 Clients
= $ 48 Per Unit
b. Break- Even Point( Units) = Fixed Cost/ Contribution Margin Per Unit
= 438 Units
Break- Even Point(in Dollars) = Fixed Cost/ Contribution Margin Ratio
= $ 21,024 / 40%
= $ 52,560
Question 05:
Billings Company has the following information available for Setpember 2017.
Unit selling price of video game consoles $400
Unit variable costs $280
Total fixed costs $54,000
Units sold 600
Answer:
Billings Company
Break-Even Contribution Income Statement
For the Month Ended September 30, 2017
Total Per Unit
Sale (450 units * $400 per unit) $180,000 $400
Variable costs (450 units * $280 per unit) 126,000 280
Contribution margin 54,000 120
Fixed costs 54,000
Operating income (loss) 0