Question

2.Using the information below, compute the manufacturing cycle time:

Process time	9.0		hours
Inspections time	0.5		hours
Move time	0.6		hours
Wait time	0.9		hours
Warehouse storage time	89.0		hours

10.5hrs
9.5hrs
11 hrs
100 hrs
10.1 hrs

3.Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:

Office Expenses	Total				Allocation Basis
Salaries	$	48,000			Number of employees
Depreciation		28,000			Cost of goods sold
Advertising		62,000			Net sales

Item	Drilling			Grinding			Total
Number of employees		1,600			2,400			4,000
Net sales	$	366,000		$	549,000		$	915,000
Cost of goods sold	$	117,800		$	192,200		$	310,000

The amount of the advertising cost that should be allocated to Grinding for the current period is:

24800
69800
37200
366000
85400

4.Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $2.60 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.85 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,800 cost. The additional processing will yield 10,000 bags of Premium Green and 3,800 bags of Green Deluxe, which can be sold for $8.85 and $6.85 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be:
114530
111730
16030
13230
2800

5.factor Co. can produce a unit of product for the following costs:
Direct material $8.80 Direct labor 24.80 Overhead 44.00 Total costs per unit$77.60
An outside supplier offers to provide Factor with all the units it needs at $47.00 per unit. If Factor buys from the supplier, the company will still incur 65% of its overhead. Factor should choose to:

Buy since the relevant cost to make it is $62.20.

Make since the relevant cost to make it is $49.00.

Buy since the relevant cost to make it is $49.00.

Make since the relevant cost to make it is $33.60.

Buy since the relevant cost to make it is $33.60.

6. Walters manufactures a specialty food product that can currently be sold for $21.70 per unit and has 19,700 units on hand. Alternatively, it can be further processed at a cost of $11,700 and converted into 11,700 units of Deluxe and 5,700 units of Super. The selling price of Deluxe and Super are $31.30 and $19.70, respectively. The incremental net income of processing further would be:

Multiple Choice

$39,310.

$51,010.

$17,700.

$43,700.

$11,700.

7.

Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $7,000. The division sales for the year were $1,054,000 and the variable costs were $864,000. The fixed costs of the division were $197,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be:

Multiple Choice

$59,100 decrease

$130,900 decrease

$52,100 decrease

$190,000 increase

$190,000 decrease

8.If the internal rate of return (IRR) of an investment is lower than the hurdle rate, the project should be rejected. True or false?

I am having an exam right now. Please help me as much as you can. Thank you so much!!!!!

Answer 1

2)Manufacturing time includes time taken to convert raw materials to finished goods
Manufacturing cycle time = Process time + Move time + Inspection time + Queue time
=9+0.6+0.5+0.9=11hr
it is option C

3)Advertising cost is based on net sales
grinding allocation=549000/(549000+366000)=60%
advertising costs=60%*62000=37200
It is option C

7)If we remove division the fixed costs can not be eliminated completely. The impact on net income
Sales lost=-1054000
Variable costs avoided=864000
Fixed costs eliminated=30%*197000=59100
Impacr on operating income=130900 decrease
Option B

8)True since the minimum return expected should be higher than hurdle rate