Question 3

Computing Markups The predicted 2009 costs for Osaka Motors are as follows:

Variable	$100,000	Variable	$300,000
Fixed	220,000	Fixed	200,000

Average total assets for 2009 are predicted to be $6,000,000.

(b) If the company desires a 7 percent rate of return on total assets, what is the markup percentage on total manufacturing costs for (1) unassigned costs and (2) desired profit? (Round your answers to the nearest whole percent.)

Markup to cover unassigned costs

Answer ___________%

Markup to cover desired profit

Answer ___________%

Question 4

Product Pricing: Two Products

Quality Data manufactures two products, CDs and DVDs, both on the same assembly lines and packaged 10 disks per pack. The predicted sales are 400,000 packs of CDs and 500,000 packs of DVDs. The predicted costs for the year 2009 are as follows:

Materials	$100,000	$600,000
Other	250,000	600,000

Each product uses 50 percent of the materials costs. Based on manufacturing time, 40 percent of the other costs are assigned to the CDs, and 60 percent of the other costs are assigned to the DVDs. The management of Quality Data desires an annual profit of $150,000. (a) What price should Quality Data charge for each disk pack if management believes the DVDs sell for 20 percent more than the CDs? Round answers to the nearest cent. CDs $ ____________

DVDs $ _____________

(b) What is the total profit per product using the selling prices determined in part (a)? Usenegative signs with answers, if appropriate.

CDs $ _____________

DVDs $ ____________

Question 4 (7)

Interdepartment Services: Direct Method Tucson Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are service departments (S1, S2, and S3). All costs of the service departments are allocated to the producing departments. The following table shows the distribution of services from the service departments.

S1	--	5%	25%	50%	20%
S2	10%	--	5	45	40
S3	15	5	--	20	60

The direct operating costs of the service departments are as follows:

S1	$35,000
S2	170,000
S3	15,000

Using the direct method, prepare a schedule allocating the service department costs to the producing departments.

Do not round while completing your calculations.

Total costs	$__________	$__________	$__________	$__________	$__________