MGMT
640 Final Exam Answers Part 1 and Part 2
MGMT 640 Final Exam Answers Part 1
and Part 2
Question
Attempt 1
Written: May 10, 2015 10:18 AM – May
10, 2015 11:12 AM
Submission View
Released: Aug 11, 2014 12:01 AM
Available until: May 17, 2015 9:51 AM
Feedback after End of Due Date
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Question 1
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1 / 1 point
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A typical use of managerial accounting
is to:
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help investors and creditors
assess the financial position of the company.
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help management get a clean audit
report
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help the marketing manager decide
which product promotion to implement
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help the SEC decide whether
management is in compliance of its policies.
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Question 2
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1 / 1 point
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Three costs incurred by Pitt Company
are summarized below:
1,000 units 2,000 units
Cost A $10,000 $15,000
Cost B $21,000 $21,000
Cost C $16,000 $32,000
Which of these costs are variable?
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A, B, and C
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A and B
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A only
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C only
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3
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Bubba’s Steakhouse has budgeted the
following costs for a month in which 1,600 steak dinners will be produced and
sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,800;
depreciation, $720; and other fixed costs, $450. Each steak dinner sells for
$12.00 each. How much would Shula’s profit increase if 10 more dinners were
sold?
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Question 4
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0 / 1 point
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Bellfont Company produces door
stoppers. August production costs are below:
Door Stoppers produced 78,000
Direct material (variable) $20,000
Direct labor (variable) 40,000
Supplies (variable) 20,000
Supervision (fixed) 26,500
Depreciation (fixed) 22,500
Other (fixed) 6,000
In September, Bellfont expects to
produce 100,000 door stoppers. Assuming no structural changes, what is
Bellfont’s production cost per door stopper for September?
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Question 5
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1 / 1 point
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Aaron’s chairs is in the process of
preparing a production cost budget for August. Actual costs in July for 120
chairs were:
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Materials cost
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$4,630
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Labor cost
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2,880
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Rent
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1,500
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Depreciation
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2,500
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Other fixed costs
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3,200
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Materials and labor are the only
variable costs. If production and sales are budgeted to change to 100 chairs in
August, how much is the expected total variable cost on the August budget?
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Question 6
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1 / 1 point
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Carry-ALL plans to sell 1,300
carriers next year and has budgeted sales of $46,000 and profits of $22,000.
Variable costs are projected to be $20 per unit. Michael Co. offers to pay
$20,400 to buy 660 units from Carry-ALL. Total fixed costs are $7,000 per year.
This offer does not affect Carry-ALL’s other planned
operations. The incremental revenues for this situation are
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Question 7
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1 / 1 point
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Stellar Company has the following
sales, variable cost, and fixed cost. If sales increase by $10,000 then their
profit increases/decreases by how much?
Sales $50,000
Variable Costs $9,700
Fixed Costs $26,000
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Question 8
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1 / 1 point
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Susan is trying to decide whether or
not to attend college during the next 12-week session. She has the following
options:
- Attend college full-time at a cost of $1,200.
- Attend college part-time at a cost of $500 and work part-time earning $2,000.
- Work full-time earning $4,800.
What is Susan’s incremental profit
if she chooses option 3 over option 2?
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Question 9
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0 / 1 point
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Total costs were $79,000 when 25,000
units were produced and $93,000 when 37,000 units were produced. Use the
high-low method to find the estimated total costs for a production level of
32,000 units.
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Question 10
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1 / 1 point
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Professional University teaches a
large range of undergraduate courses. It is interested in determining the cost
equation for the facilities cost as a function of student credit hours so that
it an more accurately budget its facilities costs as enrollment grows.
Information for the high and low cost semesters and volumes for last 5 years
appears below
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Semester
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Student Credit Hours
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Facilities Cost
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Spring 2007
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250,000
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$500,000
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Fall 2004
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300,000
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$530,000
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Using the high low method, with
student credit hours as the activity driver, what is the equation for
facilities cost (FC) as a function of student credit hours?
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FC = $350,000 + $0.60 / student
credit hour
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FC = -$585,100 + $1.67 / student
credit hour
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FC = $1.77 / student credit hour
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FC = $2 / student credit hour
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View Feedback
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Question 11
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1 / 1 point
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Randy’s tireland makes a product
that sells for $74 per unit and has $52 per unit in variable costs. Annual
fixed costs are $24,000. If Rambles sells 10 units less than breakeven, how
much loss would the company recognize on its income statement?
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Question 12
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1 / 1 point
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Ritz Furniture has a contribution
margin ratio of 0.16. If fixed costs are $162,400, how many dollars of revenue
must the company generate in order to reach the break-even point?
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Question 13
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1 / 1 point
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U.S. Telephone Cellular sells phones
for $100. The unit variable cost per phone is $50 plus a selling commission of
10% (based on the unit sales price per phone). Fixed manufacturing costs total
$1,130 per month, while fixed selling and administrative costs total $2,380.
How many phones must be sold to achieve the breakeven point?
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Question 14
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1 / 1 point
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Swimkids is a swimsuit manufacturer.
They sell swim suits at a selling price is $30 per unit. Swimkids variable
costs are $18 per unit. Fixed costs are $88,900. Swimkids expects sales of
$278,000 next year. What is Swimkids’s margin of safety (in dollars)?
15
Lambardi Company sells 3 types of bags. Bag A sells for $19 and has variable cost of $9.00 per unit. Bag B sells for $14 and has variable cost of $12.00 per unit. Bag C sells for $9 and has variable costs of $6.00 per unit. Lambardi sells in a mix of 2 units of A, 3 units of B and 5 units of C. What is the weighted average contribution margin per unit for Lambardi?
Lambardi Company sells 3 types of bags. Bag A sells for $19 and has variable cost of $9.00 per unit. Bag B sells for $14 and has variable cost of $12.00 per unit. Bag C sells for $9 and has variable costs of $6.00 per unit. Lambardi sells in a mix of 2 units of A, 3 units of B and 5 units of C. What is the weighted average contribution margin per unit for Lambardi?
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Question 16
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1 / 1 point
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Product A has a contribution margin
per unit of $500 and required 2 hours of machine time. Product B has a
contribution margin per unit of $1,000 and requires 5 hours of machine time.
How much of each product should be produced given there are 100 hours of
available machine time?
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50 units of A and 25 units of B.
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25 units of B.
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50 units of A.
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None of the above
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Hide Feedback
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Question 17
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1 / 1 point
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Delfi Company produces two models of
seats, Toro and Prep. Information regarding these products for May follows:
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Toro
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Prep
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Number of units
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3,000
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7,000
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Sales revenue
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$120,000
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$140,000
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Variable costs
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60,000
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42,000
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Fixed costs
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24,000
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50,000
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Net Income
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$36,000
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$48,000
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Pounds of plastic to produce one
bucket
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4.0
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1.6
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Contribution margin per unit
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$20
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$14
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Due to increased demand of plastic
in the market, Delfi Company can obtain only 9,000 pounds of plastic per month.
Delfi can sell as many seats as it can produce of either model. How many of
each model should Delfi produce to maximize profit in May considering the
constraint?
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Toro: 0; Prep: 4,375
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Toro: 2,250; Prep: 0
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Toro: 1,125; Prep: 2,812
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Toro: 0; Prep: 5,625
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Hide Feedback
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Question 18
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1 / 1 point
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Abagail Corp. uses activity-based
costing system with three activity cost pools. The following information is
provided:
Costs: Wages and salaries $ 200,000
Depreciation 105,000
Utilities 114,000
Total $440,000
Activity Cost Pools
Assembly Setting Up Other
Wages and salaries 0.56 30% 10%
Depreciation 0.30 45% 20%
Utilities 0.24 40% 30%
How much total cost would be
allocated to the Assembly activity cost pool?
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Question 19
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1 / 1 point
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Which of the following is not a goal
of Managerial Accounting?
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Provide information managers need
for planning.
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Provide information managers need
for market wide interest rates.
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Provide information managers need
for control.
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Provide information managers need
for decision making.
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Question 20
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1 / 1 point
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Which one of the following is least
likely to be a fixed cost?
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Rent for buildings
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Rent for land
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Cost of commodity inputs
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Cost of property, plant and
equipment
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part 2
Attempt 1
Written: May 10, 2015 11:15 AM – May
10, 2015 12:13 PM
Submission View
Released: Aug 11, 2014 12:01 AM
Available until: May 17, 2015 10:52 AM
Feedback after End of Due Date
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Question 1
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1 / 1 point
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Maxx Inc. has provided the following
data from its activity-based costing system:
Activity Cost Pools Total Cost Total Activity
Designing products $385,300 6,580
product design hours
Setting up batches $52,678 7366
batch set-ups
Assembling products $25,122 4,018
assembly hours
The activity rate for the “designing
products” activity cost pool is:
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Question 2
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1 / 1 point
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Sasha Company allocates the
estimated $188,400 of its accounting department costs to its production and
sales departments since the accounting department supports the other two
departments particularly with regard to payroll and accounts payable functions.
The costs will be allocated based on the number of employees using the direct
method. Information regarding costs and employees follows:
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Department
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Employees
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Accounting
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4
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Production
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35
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Sales
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16
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How much of the accounting department
costs will be allocated to the production?
Answer:
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Question 3
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1 / 1 point
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Medusa Company allocates costs from
the payroll department (S1) and the maintenance department (S2) to the molding
(P1), finishing (P2), and packaging (P3) departments. Payroll department costs
are allocated based on the number of employees in the department and
maintenance department costs are allocated based on the number of square feet
which the production department occupies within the factory. Information about
the departments is presented below:
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Number of
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Number of Square
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Department
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Costs
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Employees
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Feet Occupied
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Payroll (S1)
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$137,000
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2
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2,000
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Maintenance (S2)
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$220,000
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8
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64,000
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Molding (P1)
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69
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100,000
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Finishing (P2)
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42
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60,000
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Packaging (P3)
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20
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40,000
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Medusa uses the direct method to
allocate costs. Round all answers to the nearest dollar.
What amount of the payroll department costs will be allocated to the molding department?
What amount of the payroll department costs will be allocated to the molding department?
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Question 4
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1 / 1 point
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The Manassas Company has 55 obsolete
keyboards that are carried in inventory at a cost of $9,600. If these keyboards
are upgraded at a cost of $7,200, they could be sold for $18,800.
Alternatively, the keyboards could be sold “as is” for $8,800. What is the net
advantage or disadvantage of re-working the keyboards?
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Question 5
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1 / 1 point
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Ritz Company sells fine collectible
statues and has implemented activity-based costing. Costs in the shipping
department have been divided into three cost pools. The first cost pool
contains costs that are related to packaging and shipping and Rand has
determined that the number of boxes shipped is an appropriate cost driver for
these costs. The second cost pool is made up of costs related to the final
inspection of each item before it is shipped and the cost driver for this pool
is the number of individual items that are inspected and shipped. The final
cost pool is used for general operations and supervision of the department and
the cost driver is the number of shipments. Information about the department is
summarized below:
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Cost Pool
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Total Costs
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Cost Driver
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Annual Activity
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Packaging and shipping
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$161,800
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Number of boxes shipped
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21,600 boxes
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Final inspection
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$199,900
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Number of individual items shipped
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97,000 items
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General operations and supervision
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$82,600
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Number of orders
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8,600 orders
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During the period, the Far East
sales office generated 661 orders for a total of 6,190 items. These orders were
shipped in 1,296 boxes. What amount of shipping department costs should be
allocated to these sales?
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Question 6
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0 / 1 point
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Baller Financial is a banking
services company that offers many different types of checking accounts. The
bank has recently adopted an activity-based costing system to assign costs to
their various types of checking accounts. The following data relate to the
money market checking accounts, one of the popular checking accounts, and the
ABC cost pools:
Annual number of accounts = 59,000 accounts Checking account cost pools:
Annual number of accounts = 59,000 accounts Checking account cost pools:
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Cost Pool
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Cost
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Cost Drivers
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Returned check costs
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$2,920,000
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Number of returned checks
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Checking account reconciliation
costs
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59,000
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Number of account reconciliation
requests
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New account setup
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637,000
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Number of new accounts
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Copies of cancelled checks
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393,000
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Number of cancelled check copy
requests
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Online banking web site maintenance
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188,000
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Per product group (type of
account)
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Annual activity information related
to cost drivers:
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Cost Pool
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All Products
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Money Market Checking
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Returned check
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200,000 returned checks
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18,000
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Check reconciliation costs
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393,000 checking account
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420
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New accounts
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60,000 new accounts
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15,000
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Cancelled check copy requests
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92,000 cancelled check
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60,000
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Web site costs
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8 types of accounts
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1
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Calculate the overhead cost per
account for the Money Market Checking.
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Question 7
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1 / 1 point
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Sosa Company has $39 per unit in
variable costs and $1,900,000 per year in fixed costs. Demand is estimated to
be 138,000 units annually. What is the price if a markup of 35% on total cost
is used to determine the price?
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Question 8
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1 / 1 point
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Bob’s Company sells one product with
a variable cost of $5 per unit. The company is unsure what price to charge in
order to maximize profits. The price charged will also affect the demand. If
fixed costs are $100,000 and the following chart represents the demand at various
prices, what price should be charged in order to maximize profits?
Units Sold Price
30,000 $10
40,000 $9
50,000 $8
60,000 $7
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$10
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$9
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$8
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$7
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View Feedback
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Question 9
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1 / 1 point
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A retailer purchased some trendy
clothes that have gone out of style and must be marked down to 30% of the
original selling price in order to be sold. Which of the following is a sunk
cost in this situation?
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the original selling price
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the anticipated profit
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the original purchase price
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the current selling price
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Question 10
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1 / 1 point
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Carlton Products Company has
analyzed the indirect costs associated with servicing its various customers in
order to assess customer profitability. Results appear below:
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Cost Pool
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Annual Cost
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Cost Driver
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Annual Driver Quantity
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Processing electronic orders
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$1,000,000
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Number of orders
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500,000
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Processing non-electronic orders
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$2,000,000
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Number of orders
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400,000
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Picking orders
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$3,000,000
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Number of different products
ordered
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800,000
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Packaging orders
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$1,500,000
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Number of items ordered
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50,000,000
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Returns
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$2,000,000
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Number of returns
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50,000
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If all costs were assigned to
customers based on the number of items ordered, what would be the cost per item
ordered?
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Question 11
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1 / 1 point
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Costa Company has a capacity of
40,000 units per year and is currently selling 35,000 for $400 each. Barton
Company has approached Costa about buying 2,000 units for only $300 each. The
units would be packaged in bulk, saving Costa $20 per unit when compared to the
normal packaging cost. Normally, Costa has a variable cost of $280 per unit.
The annual fixed cost of $2,000,000 would be unaffected by the special order.
What would be the impact on profits if Costa were to accept this special order?
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Profits would increase $40,000.
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Profits would increase $60,000.
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Profits would increase $80,000
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Question 12
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0 / 1 point
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A company has $6.70 per unit in
variable costs and $3.00 per unit in fixed costs at a volume of 50,000 units.
If the company marks up total cost by 0.49, what price should be charged if
64,000 units are expected to be sold?
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Question 13
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1 / 1 point
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Customer profitability analysis
might result in:
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dropping some customers that are
unprofitable.
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lowering price or offering
incentives to profitable customers.
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giving incentives to all customers
to place orders online.
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All of the above.
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Question 14
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1 / 1 point
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The Estrada Company uses cost-plus
pricing with a 0.34 mark-up. The company is currently selling 100,000 units at
$12 per unit. Each unit has a variable cost of $5.90. In addition, the company
incurs $198,200 in fixed costs annually. If demand falls to 82,700 units and
the company wants to continue to earn a 0.34 return, what price should the company
charge?
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Question 15
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1 / 1 point
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A new product is being designed by
an engineering team at Golem Security. Several managers and employees from the
cost accounting department and the marketing department are also on the team to
evaluate the product and determine the cost using a target costing methodology.
An analysis of similar products on the market suggests a price of $125.00 per
unit. The company requires a profit of 0.19 of selling price. How much is the
target cost per unit?
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Question 16
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0 / 1 point
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A company using activity based
pricing marks up the direct cost of goods by 0.20 plus charges customers for
indirect costs based on the activities utilized by the customer. Indirect costs
are charged as follows: $6.60 per order placed; $2.00 per separate item
ordered; $29.60 per return. A customer places 10 orders with a total direct
cost of $2,700, orders 295 separate items, and makes 4 returns. What will the
customer be charged?
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Question 17
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1 / 1 point
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A law firm uses activity-based
pricing. The company’s activity pools are as follows:
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Cost Pool
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Annual Estimated Cost
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Cost Driver
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Annual Driver Quantity
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Consultation
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187,000
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Number of consultations
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100 consultations
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Administrative Costs
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147,000
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Admin labor hours
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9,900 labor hours
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Client Service
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92,000
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Number of clients
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110 clients
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The firm had two consultations with
this client and required 130 administrative labor hours. What additional costs
will be charged to this customer?
Answer
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Question 18
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1 / 1 point
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The Break-Even point is the
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number of units sold that allow
the company to neither a profit nor a loss
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number of units sold that allow
the company to pay labor their wages
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dollar revenues that allows the
firm to pay the required rate of return to its investors
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dollar profits that allows the
firm to pay the required rate of return to its investors
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Question 19
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1 / 1 point
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Which of the following is not part
of the Process of Cost Allocation
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Select an allocation base to
relate the cost pools to the cost objectives
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Form cost pools
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Identify the cost objectives
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Allocate revenues to different
products of the firm
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Question 20
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1 / 1 point
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Opportunity costs are:
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Never incremental costs
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Always incremental costs
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Sometimes sunk costs
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Greater than sunk costs
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