Brannon company manufactures ceiling fans and uses an activity

Mock Test over Ch 7 & 9 Set C SFSU ID ________; Name Printed:________________________ Q1. [30% of test] DeCesare Computers makes 5,200 units of a circuit board, CB76, at a cost of $270 each. Variable cost per unit is $180 and fixed cost per unit is $90. Peach Electronics offers to supply 5,200 units of CB76 for $250. If DeCesare buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $70 per unit. Should DeCesare accept Peach’s offer? Explain. Q2. [20% of test] A truck, costing $100,500 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $13,000 cash and replaced with a similar truck costing $103,000 or (b) rebuilt for $70,000 and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations. Q3. [20% of test] Inglenook Co. produces wine. The company expects to produce 300,000 two-liter bottles of Chablis in 2015. Inglenook purchases empty glass bottles from an outside vendor. Its target ending inventory of such bottles is 6,000; its beginning inventory is 5,000. For simplicity, ignore breakage. Compute the number of bottles to be purchased in 2015. Q4. [30% of test] The Howell Company has prepared a sales budget of 30,000 finished units for a 3month period. The company has an inventory of 9,000 units of finished goods on hand at December 31 and has a target finished goods inventory of 11,000 units at the end of the succeeding quarter. It takes 5 gallons of direct materials to make one unit of finished product. The company has an inventory of 56,000 gallons of direct materials at December 31 and has a target ending inventory of 66,000 gallons at the end of the succeeding quarter. How many gallons of direct materials should Howell Company purchase during the 3 months ending March 31? 15-1 15-2 Acct101 MOCKtest 2 Set B Name:___________________________________ SFSU ID#________________ 3) [10% of test] At Q Company, the annual depreciation expenses for the production equipment are computed under an accelerated depreciation method, resulting in annually changing depreciation amounts. With respect to the production volume, the depreciation amount total level is a: _______ cost [Select one: Fixed or Variable]. Then, explain your ground concisely below. 6). Brannon Company manufactures ceiling fans and uses an activity-based costing system to allocate all manufacturing conversion costs. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts $ .08 per part Machining Machine hours 7.20 per machine hour Assembling Number of parts .35 per part Packaging Number of finished units 2.70 per finished unit What is the total manufacturing cost per ceiling fan? _____________ [10 % of test] PART II. Show your calculations in the spaces provided to avoid penalties.] Q1 WasteKing uses a fleet of trucks in its business, and wants to know how distance affects these costs. Month Miles driven Total operating costs January 18,300 $11,200 February 16,500 $10,700 March 14,500 $9,600 April 11,500 $7,020 May 10,300 $7,200 Using the high-low method, the variable cost per mile.is _________ per mile [15% of test] Again using the hi-lo method, the monthly fixed cost is: _____________ [5% of test] 87 Q2 to Q4 use this case: John’s Gym has sales of $100,000 this month, contribution margin of $60,000 and operating profit of $12,000. Contribution margin ratio is 60% of sales and monthly fixed expenses are $48,000. Q2. [25% of test] What is the breakeven in sales dollars? (a)________________________ The break-even ratio to current sales? (b)_____________ The firm’s operating risk ratio? (c)_______ Q3. What is the firm’s current margin of safety ratio to sales [ie., safety ratio]? _____ % [5% of test] Q4. What is the firm’s operating leverage number? _________ times [10 % of test] Q5. Use this case: BM Company sells two products, A and B. Product A sells for $10 per unit with variable costs of $8 per unit. Product B sells for $20 per unit with variable costs of $10 per unit. The ratio of total contribution margin to total sales dollars is 32%. Total fixed costs for the company are $40,000. BM Company typically sells three (3) Product A’s for every Product B. [20% of test] a. What is the breakeven point in combined total sales revenue dollars? $_____________ b. Determine the breakeven point in numbers of A and B. Ans: ________ units of A; _________units of B. 88