1. Question : (TCO 1) ABC systems create Question 2. Question : (TCO 1) Merriamn Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $400,000 10,000 hours Account billing lines $280,000 4,000,000 lines Account verification accounts $150,000 40,000 accounts Correspondence letters $ 50,000 4,000 letters Total costs $880,000 The above activities are used by Department A and B as follows: Department A Department B Account inquiry hours 2,000 hours 4,000 hours Account billing lines 400,000 lines 200,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,600 letters How much of the account billing cost will be assigned to Department B? Question 3. Question : (TCO 2) Examples of nonfinancial budgets include all of the following EXCEPT Question 4. Question : (TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity? Question 5. Question : (TCO 3) The conference method estimates cost functions Question 6. Question : (TCO 4) Relevant costs of a make-or-buy decision include all of the following EXCEPT Question 7. Question : (TCO 5) With a constraining resource, managers should choose the product with the ________. Question 8. Question : (TCO 5) Konrade’s Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows: � � Direct materials � � � � � �$40,000 Direct labor � � � � � � �10,000 Variable overhead costs � � � � 30,000 Fixed overhead costs � � � � �20,000 Total costs � � � � � � $100,000 It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Konrade’s Engine Company has the option of purchasing the part from an outside supplier at $85 per unit. If Konrade’s Engine Company accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total Question 9. Question : (TCO 3) The cost components of an air conditioner include $35 for the compressor, $11.50 for the sheet-molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 air conditioners in the coming year. What cost function best represents these costs? Question 10. Question : (TCO 4) Opportunity costs
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