1) Larry's Appliance Shop operates retail stores that sell appliances. The cost objects are the individual sales of a given type of appliance and sales support. For refrigerators in July, the following costs were recorded:

Professional sales staff commissions $84,000

Amortization on office space4,000

Selling supplies 6,400

Office staff expenses24,800

Customer relations 8,600

Training expenses 6,000

Utilities1,400

Required:

a.Which of the costs will be subject to direct cost tracing?

b.What is the total cost for refrigerators?

c.What is the total cost of the Sales Support for refrigerators?

2) A machine shop has direct materials cost of $1,800,000 direct labour of $4,200,000 (direct labour rate is $50 per hour) and budgeted indirect manufacturing costs of $850,000. Management believes that indirect manufacturing costs increase with direct labour hours. What is the budgeted indirect manufacturing cost rate?

A) $2.12

B) $2.33

C) $4.94

D) $10.12

E) $17.00

3) A local financial consulting firm employs 30 full-time employees. The budgeted compensation per employee is $50,000. The annual maximum chargeable time to each client is 1,000 hours. Clients always receive their full amount of time. All labour costs are included in a single direct-cost category and are traced to jobs on a per-hour basis.

Any other costs are included in a single indirect-cost pool, allocated according to professional labour-hours. Budgeted indirect costs for the year are $1,050,000, and the firm expects to have 60 clients during the coming year.

What is the budgeted indirect-cost rate per hour?

A) $1,050.00 per hour

B) $50.00 per hour

C) $35.00 per hour

D) $17.50 per hour

E) $10.00 per hour

4) A local financial consulting firm employs 30 full-time staff. The budgeted compensation per employee is $50,000, for 2,000 hours. All direct labour costs are charged to clients.

Any other costs are included in a single indirect-cost pool, allocated according to labour-hours. Actual indirect costs were $750,000. Budgeted indirect costs for the year are $525,000 and the firm expects to have 60 clients during the coming year.

What is the total cost of a job which took 27 hours, using normal costing?

A) $911.25

B) $1,012.50

C) $27,337.50

D) $30,375.00

E) $50,000.00

5) A company employs 25 full-time staff. The company spent $75,000 in advertising in the year (this amount is a period cost with a constant amount spent each year). Budgeted indirect manufacturing costs total $250,000 and the direct labour rate is $15 per hour. Budgeted labour hours were 500,000, and actual labour hours were 524,000. Actual indirect overhead was $274,600.

What are the actual and normal indirect-cost rates respectively?

A) $0.52 and $0.50

B) $0.50 and $0.52

C) $0.55 and $0.48

D) $0.67 and $0.65

E) $0.65 and $0.67

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Lets tackle these questions one by one 1 a Direct cost tracing involves costs that can be directly a... View the full answer