6300Quiz2 ABC,CVP and Variable Cost

St. Vincent’s, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers as image

Data on the cost pools and respective driver volumes follow.

The overhead cost allocated to Beta by using traditional costing procedures would be

• 240,000

• 356,000

• 444,000

• 560,000

St. Vincent’s, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers as image

The overhead cost allocated to Beta by using Activity based costing procedures would be

• 240,000

• 356,000

• 444,000

• 560,000

Trek Inc. has two service department ( HR and Maintenance) and two production department (Machining and assembly). The company allocate Maintenance provide more service than HR. The square footage occupied by each department follows:

HR 7,000

Maintenance 11,000

Machining 20,000

Assembly 28,000

Assuming use of the step-down method, over how many square feet would be building maintenance cost be allocted

• 18,000

• 48,000

• 55,000

• 66,000

Santa Production Co., Ltd. sells a single product to wholesalers. The company’s budget for the upcoming year reveals unit sales of 31,600, a selling price of $20, variable cost per unit of $8,and cost of $360,000. Santa Production’s safety margin in units is:

• (13,400)

• 0

• 1,600

• 13,600

Santa Production Co., Ltd. sells a single product to wholesalers. The company’s budget for the upcoming year reveals unit sales of 31,600, a selling price of $20, variable cost per unit of $8,and cost of $360,000. If Sants’s unit sales are 300 units more than anticipated, is break-even point will:

• Increases by $12 per unit sold.

• Decrease by $12 per unit sold.

• Not changes

• Not enough information.

The following data relate to Lebeaux Corp. for the year just ended:

Sales revenue $750,000

Cost of goods sold:

Variable portion $370,000

Fixed portion $110,000

Variable selling and administrative cost $50,000

Fixed selling and administration cost $75,000

Lebeaux Corp. variable costing income statement would show:

• Gross margin of 270,000

• Contribution margin of 330,000

• gross margin of 330,000

• Gross margin of 145,000