1.

Cherry Ltd. manufactures coffee tables. Cherry Ltd. has a policy of adding a 20% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month:

Output units: 30,000 tables

Machine-hours: 8,000 hours

Direct manufacturing labour-hours: 10,000 hours

Direct materials per unit: $100

Direct manufacturing labour per hour: $12

Variable manufacturing overhead costs: $322,500

Fixed manufacturing overhead costs: $1,200,000

Product and process design costs: $900,000

Marketing and distribution costs: $1,125,000

Cherry Ltd. is approached by an overseas customer to fulfill a one-time-only special order for 1,000 units. All cost relationships remain the same except for a one-time setup charge of $20,000. No additional design, marketing, or distribution costs will be incurred. What is the minimum acceptable bid per unit on this one-time-only special order?

Select one:

a. $122.75

b. $457.25

c. $161.70

d. $114.75

e. $134.75

2.

Lisa's Automotive Company has two support departments, Personnel and Maintenance. The Maintenance Department costs of $80,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $20,000 are allocated based on the number of employees. Costs of Departments A and B are $40,000 and $60,000, respectively.

Data on standard service hours and number of employees are as follows:

	Maintenance Dept.	Personnel Dept.	Production Dept. A	Production Dept. B
Standard service hours used	200	200	240	160
Number of employees	10	20	40	120

What is the cost of the Maintenance Department allocated to Department B using the step-down method if the support department with the highest percentage of interdepartmental service to the other support department is allocated first?

Select one:

a. $21,333

b. $12,800

c. $48,000

d. $16,000

3.

Which of the following departments is least likely to be a support department for a boat manufacturing company?

Select one:

a. Data processing.

b. Accounting.

c. Human resources.

d. Purchasing.

e. Molding and assembly.

4.

Red Oil Corp. has two divisions, Refining and Production. The company's primary product is Clean Oil. Each division's costs are provided below:

Refining:	Variable costs per litre of oil	$30
	Fixed costs per litre of oil	$24
Production:	Variable costs per litre of oil	$6
	Fixed costs per litre of oil	$4

The Production Division is able to sell the oil to other areas for $24 per litre. The Refining Division has been operating at a capacity of 80,000 litres a day, using oil from the Production Division and oil purchased from other suppliers. The Refining Division usually purchases 50,000 litres of oil, on average, from the Production Division and 30,000 litres, on average, from other suppliers at $40/litre.

What is the transfer price per litre assuming the method used is 175% of variable costs?

Select one:

a. $24.50

b. $12.00

c. $10.50

d. $17.50

e. $12.50

5.

Cherry Ltd. manufactures coffee tables. Cherry Ltd. has a policy of adding a 20% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month:

Output units: 30,000 tables

Machine-hours: 8,000 hours

Direct manufacturing labour-hours: 10,000 hours

Direct materials per unit: $100

Direct manufacturing labour per hour: $12

Variable manufacturing overhead costs: $322,500

Fixed manufacturing overhead costs: $1,200,000

Product and process design costs: $900,000

Marketing and distribution costs: $1,125,000

What is the Cherry Ltd. full product cost for long-run pricing purposes?

Select one:

a. $222.25

b. $134.75

c. $122.75

d. $242.25

e. $262.25