Managerial Accounting Paper 7

Anderson Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product.
Production volume: 4,000 units 5,000 units
Direct materials: $99.20 per unit $99.20 per unit
Direct labor: $45.50 per unit $45.50 per unit
Manufacturing overhead: $94.00 per unit $77.60 per unit
The best estimate of the total monthly fixed manufacturing cost is:

A partial listing of costs incurred during December at Rooks Corporation appears below:
Factory supplies: $7,000
Administrative wages and salaries: $92,000
Direct materials: $176,000
Sales staff salaries: $32,000
Factory depreciation: $52,000
Corporate headquarters building rent: $47,000
Indirect labor: $23,000
Marketing: $136,000
Direct labor: $82,000
The total of the period costs listed above for December is:

A partial listing of costs incurred at Gilhooly Corporation during September appears below:
Direct materials: $183,000
Utilities, factory: $9,000
Administrative salaries: $90,000
Indirect labor: $25,000
Sales commissions: $33,000
Depreciation of production equipment: $25,000
Depreciation of administrative equipment: $32,000
Direct labor: $124,000
Advertising: $148,000
The total of the manufacturing overhead costs listed above for September is:

Products might consume overhead in different proportions due to differences in

Which of the following is NOT a limitation of a plantwide overhead rate? a. b. c. d.

Berol Company, which plans to sell 200,000 units of finished product in July, anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month’s estimated sales. There are 150,000 finished units in inventory on June 30.
Each unit offinished product requires 4 pounds ofdirect materials at a cost of $1.20 per pound. There are 800,000 pounds of direct materials in inventory on June 30.
Berol Company’s production requirement in units offinished product forthe 3-month period ending September 30 is:

Berol Company, which plans to sell 200,000 units of finished product in July, anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month’s estimated sales. There are 150,000 finished units in inventory on June 30.
Each unit offinished product requires 4 pounds ofdirect materials at a cost of $1.20 per pound. There are 800,000 pounds of direct materials in inventory on June 30.
Assume Berol Company plans to produce 600,000 units of finished product in the 3-month period ending September 30, and to have direct materials inventory on hand at the end of the 3- month period equal to 25% ofthe use in that period. The estimated cost ofdirect materials purchases for the 3-month period ending September 30 is:

Moss Point Manufacturing recently completed and sold an order of 50 units that had costs as follows.
Direct materials $ 1,500
Direct labor (1,000 hours x 8.50) 8,500
Variable overhead (1,000 hours x $4.00)* 4,000
Fixed overhead** 1.40
Total $15400
*Applied on the basis of direct labor hours.
**Applied at the rate of 10% of variable cost.
The company has now been requested to prepare a bid for 150 units of the same product.
If an 80 percent learning curve is applicable, Moss Point’s total cost on this order would be estimated at:

Moss Point Manufacturing recently completed and sold an order of 50 units that had costs as follows.
Direct materials $ 1,500
Direct labor (1,000 hours x 8.50) 8,500
Variable overhead (1,000 hours x $4.00)* 4,000
Fixed overhead** 1.40
Total $15400
*Applied on the basis of direct labor hours.
**Applied at the rate of 10% of variable cost.
The company has now been requested to prepare a bid for 150 units of the same product.
If Moss Point experienced a 70 percent learning curve, the bid for 150 units would :

Which one of the following is most relevant to a manufacturing equipment replacement decision?