ACCT 221 Quiz 4 Please answer in the Answer Sheet provided at the end of the

ACCT 221 Quiz 4EVERY QUESTION IS WORTH 4 POINTSPlease answer in the Answer Sheet provided at the end of theQuestion booklet. Submit the Answer Sheet only through Quiz 4Assignment link in LEO.Do NOT submit the entire Question Booklet. If you do so, you willhave a 5 point deduction.Deadline: 11.59 pm EST, December 6I will accept late work up to 12 hours after the deadline with anautomatic 10 point penalty. After that, you will receive a zero forthis Quiz.1) Pacific Auto manufactures batteries for cars. The company has the capacity to produce35,000 batteries per year, and is currently producing and selling 25,000 batteries per year.The following information relates to current production:Sale price per unitVariable costs per unit:ManufacturingMarketing and administrativeTotal fixed costs:ManufacturingMarketing and administrative$1756020$700,000$300,000If a special sales order is accepted for 5,500 batteries at a price of $150 per unit, and fixedcosts remain unchanged, what is the change in operating income? (Assume the special salesorder will require variable manufacturing costs and variable marketing and administrativecosts.)A) Operating income decreases by $825,000.B) Operating income increases by $825,000.C) Operating income decreases by $385,000.D) Operating income increases by $385,000.2) Talk Made EZ Company makes special equipment used in cell phones. Each unit sells for$400. Talk Made EZ uses just-in-time inventory procedures; it produces and sells 12,500units per year. It has provided the following income statement data:Traditional CostingRevenue$5,000,000Cost of goods sold3,000,000Gross Profit2,000,000Selling & admin expenses 650,000Contribution MarginRevenue$5,000,000Variable ExpensesManufacturing1,000,000Selling & admin400,000Contribution Margin 3,600,000Fixed ExpensesManufacturing2,000,000Selling & admin250,000Operating income$1,350,000Operating income$1,350,000A foreign company has offered to buy 100 units for a reduced price of $250 per unit. Themarketing manager says the sale will not negatively impact the company’s regular sales.The sales manager says that this sale will not require any incremental selling &administrative costs, as it is a one-time deal. The production manager reports that there isplenty of excess capacity to accommodate the deal without requiring any additional fixedcosts. If Talk Made EZ accepts the deal, how will this impact operating income?A) up $17,000B) down $8,000C) up $25,000D) down $8003) Benjamin Sports Inc. has two product lines—softball helmets and football helmets. Incomestatement data for the most recent year follow:Sales revenueVariable expensesContribution marginFixed expensesOperating income (loss)TotalSoftball Helmets Football Helmets$850,000$500,000$350,000(530,000)(250,000)(280,000)$320,000$250,000$70,000(180,000)(90,000)(90,000)$140,000$160,000$(20,000)Assuming fixed costs remain unchanged, and that there would be no adverse effect on othersales. What will be the effect of dropping Football Helmets line on the operating income ofthe company?A) Operating income will increase by $20,000.B) Operating income will increase by $90,000.C) Operating income will decrease by $70,000.D) Operating income will decrease by $350,000.4) Sadie Kitchenware Co. manufactures two products: toaster ovens and bread machines.The following data are available:Sale priceVariable costsToaster Ovens$80$40BreadMachines$150$70Sadie Kitchenware Co. can manufacture six toaster ovens per machine hour and four breadmachines per machine hour. Sadie Kitchenware Co.’s production capacity is 1,800 machinehours per month, and Sadie Kitchenware Co. can sell as many units of either type as it canproduce. What product and how many units should the company produce in a month tomaximize profits?A) 7,200 bread machinesB) 5,400 toaster ovens and 3,600 bread machinesC) 7,200 toaster ovens and 2,400 bread machinesD) 10,800 toaster ovens5) Rajiv Motors fabricates inexpensive automobiles for sale to 3rd world countries. Each autoincludes one wiring harness, which is currently made in-house. Details of the harnessfabrication are as follows:VolumeVariable cost per unitFixed costs1,200.00 units per month$12.50 per unit$20,000.00 per monthA factory in BanglaDesh has offered to supply Rajiv Motors with ready-made units for a priceof $15 each. Assume that Rajiv Motors fixed costs are unavoidable, and that Rajiv will not beable to use the excess capacity in any profitable manner. What will be the impact on Rajiv’smonthly operating income, if Rajiv decides to outsource?A) It will go up by $3,000.B) It will go down by $20,000.C) It will go up by $20,000.D) It will go down by $3,000.6) Cluck Cluck Co. produces 1,000 packs of chicken feed per month. Sales price is $4 perpack. Variable cost is $1.50 per unit, and fixed costs are $1,800 per month. Management isconsidering adding a vitamin supplement to improve the value of the product. The variablecost will go up from $1.50 to $1.90 per unit, and fixed costs will go up by 20%. Cluck Cluckwill price the new product at $5 per pack. How will this affect operating income?A) Operating income will go down by $150 per month.B) Operating income will remain unchanged.C) Operating income will go down by $400 per month.D) Operating income will go up by $240 per month.7) Which of the following statements is correct regarding the activity-based costing system?A) It uses separate indirect cost allocation rates for each activity.B) It is not as accurate or precise as traditional costing systems.C) It accumulates overhead costs by processing departments.D) It is less complex and, therefore, less costly than traditional systems.8) Morgana Avionics makes three types of radios for small aircraft: Model A, Model B, andModel C. The manufacturing operations are mechanized and there is no direct labor.Manufacturing overhead costs are significant, and Morgana has adopted an activity-basedcosting system. Direct materials costs per unit for each model are as follows:Model AModel BModel C$28$32$40Morgana has three activities: assembly, materials management, and testing. The cost driverfor assembly is machine hours. The cost driver for materials management is number ofparts, and the cost driver for testing is the number of units of product. Total costs andproduction volumes for the year 2015 were estimated as follows:AssemblyMaterials managementTestingTotal cost$780,000$120,000$22,500Total units120,00080,0005,000Cost DriverMachine hoursPartsUnitsThe Model A radio requires 12 parts to construct, and requires 16 machine hours ofprocessing. What is the manufacturing cost to make one unit of Model A?A) $150.00B) $132.00C) $126.50D) $154.509) Norman Audio Services provided the following information regarding its activity-basedcosting system:• Purchasing department costs are allocated based on the number of purchase orders andthe cost allocation rate is $75 per purchase order.• Assembly department costs are allocated based on the number of parts used and the costallocation rate is $1.00 per part.• Packaging department costs are allocated based on the number of units produced and theallocation rate is $2.00 per unit produced.Each stereo produced has 50 parts, and the direct materials cost per unit is $70. There areno direct labor costs. Quality Stereo has an order for 1,000 stereos which will require 50purchase orders in all. What is the total cost of the 1,000 stereos?A) $125,750B) $55,750C) $123,750D) $122,00010) Trang Company had the following activities, allocated costs, and allocation bases:ActivitiesAccount inquiry (hours)Account billing (lines)Account verification(accounts)Correspondence (letters)AllocatedCosts$60,000$30,000AllocationBase2,000 hours20,000 lines$15,000 20,000 accounts$10,0001,000 lettersThe above activities are carried out at two of their regional offices.Account inquiry (hours)Account billing (lines)Account verification(accounts)Correspondence (letters)NortheastOfficeMidwest Office100 hours200 hours10,000 lines7,000 lines1,000 accounts50 letters600 accounts100 lettersWhat is the cost per line to Trang for the account billing activity?A) $1.50B) $30.00C) $1.60D) $1.4311) Praneel Auto Spares Inc, a manufacturer of spare parts, has two productiondepartments: Assembling and Packaging. The Assembling department is machine oriented,while the Packaging department is labor oriented. Estimated manufacturing overhead costsfor the year 2015 were $15,000,000 for Assembling and $10,000,000 for Packaging.Calculate departmental wide allocation rates if total estimated machine hours were 30,000and labor hours were 20,000 for the year.A) $250, $300B) $500, $500C) $300, $300D) $450, $54012) What do Increased number of repeat customers and increased rate of on-time deliveriessignify?:A) product quality.B) market share.C) customer satisfaction.D) skills and knowledge of the employees.13) Zarena was reviewing the water bill for her dog day care and spa and determined thather highest bill, $3,800, occurred in May when she washed 400 dogs and her lowest bill,$2,400, occurred in November when she washed 200 dogs. What was the variable cost perdog associated with Zarena’s water bill?A) $6.00B) $12.00C) $9.50D) $7.0014) Phan Company sold 2,000 units in December at a price of $35 per unit. The variablecost is $20 per unit. The monthly fixed costs are $10,000. What is the operating incomeearned in December?A) $30,000B) $70,000C) $20,000D) $40,00015) Vatsala sells hand-knit scarves at the flea market. Each scarf sells for $25.Vatsala pays$30 to rent a vending space for one day. The variable costs are $15 per scarf. What totalrevenue amount does she need to earn to break even?A) $85B) $75C) $50D) $10016) Brielle Company sells glass vases at a wholesale price of $2.50 per unit. The variablecost of manufacture is $1.75 per unit. The monthly fixed costs are $7,500. Brielle’s currentsales are 25,000 units per month. If Brielle wants to increase operating income by 20%, howmany additional units, must Brielle sell? (Round your intermediate calculations to twodecimal places)A) 145,000 glass vasesB) 7,500 glass vasesC) 13,500 glass vasesD) 3,000 glass vases17) Out of this World Foods produces a gourmet condiment which sells for $16 per unit.Variable costs are $6 per unit, and fixed costs are $5,000 per month. If Out of this Worldexpects to sell 1,500 units, compute the margin of safety in units.A) 500 unitsB) 1,000 unitsC) 1,500 unitsD) 8,000 units18) Venkat Company has provided the following information regarding the two products thatit sells:Sales price per unitVariable cost per unitJet BoatsSki Boats$8,000$20,000$4,800$14,000Annual fixed costs are $280,000.How many units must be sold in order for Venkat to breakeven, assuming that Venkat sellsfive jet boats for every two ski boats sold?A) 70 jet boats and 28 ski boatsB) 50 jet boats and 20 ski boatsC) 20 jet boats and 50 ski boatsD) 45 jet boats and 28 ski boats19) White Marsh Company has prepared the following sales budget:MonthMarchAprilMayJuneBudgetedSales$200,000180,000220,000260,000Cost of goods sold is budgeted at 60% of sales and the inventory at the end of February was$36,000. Desired inventory levels at the end of each month are 20% of the next month’scost of goods sold. What is the desired beginning inventory on June 1?A) $52,000B) $26,400C) $43,200D) $31,20020) EZ Financing Inc. has prepared the operating budget for the first quarter of 2015. Theyforecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Variableand fixed expenses are as follows:Variable: Power cost (40% of Sales)Miscellaneous expenses: (5% of Sales)Fixed: Salary expense: $8,000 per monthRent expense: $5,000 per monthDepreciation expense: $1,200 per monthPower cost/fixed portion: $800 per monthMiscellaneous expenses/fixed portion: $1,000 per monthCalculate total selling and administrative expenses for the month of January.A) $38,500B) $47,500C) $41,700D) $43,00021) Mumbai Inc. has prepared the following purchases budget:MonthJuneJulyAugustSeptemberOctoberBudgetedPurchases$67,00072,50076,30073,70069,200All purchases are paid for as follows: 10% in the month of purchase, 50% in the followingmonth, and 40% two months after purchase. Calculate total cash payments made in Octoberfor purchases.A) $72,630B) $70,680C) $70,520D) $74,29022 Mumbai Inc. has prepared the following purchases budget:MonthJuneJulyAugustSeptemberOctoberBudgetedPurchases$67,00072,50076,30073,70069,200All purchases are paid for as follows: 10% in the month of purchase, 50% in the followingmonth, and 40% two months after purchase. Calculate balance of Accounts payable at theend of October.A) $77,680B) $91,760C) $69,330D) $74,29023) Jackson Corp. has provided a part of its budget for the 2 nd quarter:Cash collectionsCash payments:Purchases of inventoryOperating expensesCapital expendituresApr$40,000May$45,000June$52,0004,5007,90007,2005,60020,0004,5009,0004,600The cash balance on April 1 is $12,000. Assume that there will be no financing transactionsor costs during the quarter. Calculate the cash balance at the end of April.A) $50,000B) $40,200C) $39,600D) $51,80024) Baltimore Enterprises has budgeted sales for the months of September and October at$300,000 and $280,000, respectively. Monthly sales are 80% credit and 20% cash. Of thecredit sales, 50% are collected in the month of sale and 50% are collected in the followingmonth. Calculate cash collections for the month of October.A) $168,000B) $232,000C) $288,000D) $290,00025) The budgeted production of Fells Point Inc. is 8,000 units. Each unit requires 40 minutesof direct labor work to complete. The direct labor rate is $100 per hour. Calculate thebudgeted cost of direct labor for the month.A) $533,333.33B) $500,000.00C) $566,666.66D) $633,333.33ACCT 221 Quiz 3Answer SheetName: (3 point deduction if no name is provided here)Part 1Note: DO NOT SHOW COMPUTATIONS HERE IN PART 1. SHOW THEM IN PART 2 BELOW12345678910111213141516171819202122232425Part 2 Supporting ComputationsPlease show your supporting computations here below on all questions that require computations. Eg: ifyour answer to a question is 10 and you had to add 5+5=10 to get to the answer, then I need to see that.Please cross reference your supporting computations with the appropriate question number. Thesecomputations are an integral part of this quiz. Failure to include them here will result in a significant lossof points.You should have 23 sets of computations here. Only Q# 7 and 12 do not need computations.