Question:

Borderbooks Company uses activity-based costing. The company produces hard and soft -cover books. The estimated costs and expected activity for each of the activity pools follow:

Activity Estimate             Expected Activity

Cost Pool             Cost              Hard-Cover Soft-Cover  Total

Activity 1              $15,675                800        300         1,200

Activity 2              $11,900                500        200         700

Activity 3              $27,600                800        400         1,200

The activity rate for activity 3 is closest to

A             $23.00

B             $18.39

C             $69.00

D             $45.98

Question 2: Peirzynski Manufacturing Corporation gives a single product, the Utility Knife. Budgeted amounts for the coming year are as follows:

Revenues (20,000 units at $12 each)        $240,000

Direct material  40,000

Direct labor         70,000

Variable manufacturing overhead            50,000

Fixed manufacturing overhead  30,000

Net income        $50,000

Podsednik Company has provided to purchase 1,500 units of a special edition of the utility knife from Peirzynski at a price of $11.50 per unit. This special edition will have additional variable costs of $0.25 per unit. Peirzynski has the capacity to produce this order and it will not affect any of their other operations.

What is the incremental revenue related with accepting this special order?

A             $17,250

B             $18,000

C             $10,000

D             $20,000

Question 3: A project with an initial cost of $600,000 will compute no returns in the first two years of operation and returns of $300,000 per year in Years 3, 4, and 5. If taxes will be ignored and the required rate of return is 10%, determine the net present value of the project (pick the closest answer)?

A             $146,070

B             $200,000

C             ($55,925)

D             $16,560

Question 4: A company has $8.00 per unit in variable costs and $3.00 per unit in fixed costs at a volume of 50,000 units. If the company uses cost plus pricing, which of the subsequent is true?

A  The company should use a unit cost of $11.00 per unit only at a volume of 50,000 units

B  The company should use a unit cost of $11.00 at all volumes

C  The company should use a unit cost of $11.00 as long as it stays within the relevant range of volume

D  There is no volume at which the company should use a unit volume of 50,000

Question 5: Anderson Manufacturing makes a product. Budget information regarding the current period is provided below:

Revenue(100,000 units at $8.00)               $800,000

Direct labor         150,000

Direct labor         125,000

Variable manufacturing overhead            235,000

Fixed manufacturing overhead  110,000

Net income        $180,000

Dye Company approaches Anderson with a special order for 15,000 units at a price of $7.50 per unit. Variable costs can be the same as the current production and accepting the special order will not have any impact on the rest of the company's orders. Thus, Anderson is operating at capacity and will incur an additional $50,000 in fixed manufacturing overhead if the order is accepted.

What is the incremental cost related with accepting the special order?

A             $76,500

B             $93,000

C             $126,500

D             $143,000