(TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month.

ACCT 434 Advanced Cost Management Quiz 3 Answers


  1. (TCO 3) Dougherty Company employs 20 individuals. Eight employees are paid $12 per hour and the rest are salaried employees paid $3,000 a month. How would total costs of personnel be classified?
  2. (TCO 3) For January, the cost components of a picture frame include $0.35 for the glass, $0.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. A total of 1,000 frames is expected to be produced in the coming year. What cost function best represents these costs?
  3. (TCO 3) Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?
  4. (TCO 3) Penny's TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 20X2 operations: Sales (2,000 televisions) $900,000; Cost of goods sold $400,000; Store manager's salary per year $70,000; Operating costs per year $157,000; Advertising and promotion per year $15,000; Commissions (4% of sales) $36,000. What are the estimated total costs if Penny's expects to sell 3,000 units next year?
  5. (TCO 4) A decision model involves
  6. (TCO 4) When using the five-step decision process, which one of the following steps should be done last?
  7. (TCO 4) Sunk costs
  8. (TCO 4) Northwoods Incorporated manufactures rustic furniture. The cost accounting system estimates manufacturing costs to be $90 per table, consisting of 80% variable costs and 20% fixed costs. The company has surplus capacity available. It is Northwoods' policy to add a 50% markup to full costs. Northwoods is invited to bid on a one-time-only special order to supply 100 rustic tables. What is the lowest price Northwoods should bid on this special order?
  9. (TCO 5) Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows.
    Direct materials $ 90,000
    Direct labor 130,000
    Variable factory overhead 60,000
    Fixed factory overhead 140,000
    Total costs $420,000

    Of the fixed factory overhead costs, $60,000 is avoidable.
    Assuming no other use of their facilities, the highest price that Piels should be willing to pay for 10,000 units of the part is _____.
  10. (TCO 5) Helmer's Rockers manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply.
    Contribution margin per unit $18 $20
    Number of machine-hours required 3 4

    If there are 600 machine-hours available per week, how many rockers of each model should Jim Helmer produce to maximize profits?