San Juan Minerals (SJM) has two service departments and two operating departments. Operating data for these departments for last year are as follows: Service DepartmentsOperating Departments MaintenanceCafeteriaMiningProcessingDepartmental costs$48,000$45,000$70,000$130,000Machine hours 2,000 1,000 11,000 9,000Number of employees 40 30 400 360 Costs of the Maintenance Department are allocated on the basis of machine hours. Cafeteria costs are allocated on the basis of number of employees. SJM does not distinguish between variable and fixed overhead costs. Assuming that SJM allocates service department costs using the direct method, the total cost allocated from Cafeteria to Mining would be closest to:
A. $22,500
B. $21,687
C. $15,750
D. $23,684
Answer: D
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Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: JanuaryFebruaryMarchBudgeted production (in units)70,000?80,000Budgeted raw materials purchases (in pounds)142,400151,600158,800Two pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 42,000 pounds of raw materials on hand on January 1. Budgeted production for February should be: (Round your intermediate calculations to 2 decimal places.)
A. 80,000 units B. 103,400 units C. 80,600 units D. 74,000 units
Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following should not be treated as direct costs, assuming the cost object is individual clocks?
A. The clock face B. Wood C. Depreciation on clock-making equipment D. The timing mechanism for each clock
A company produces 1000 packages of cat food per month. The sales price is $3.90 per pack. Variable cost is $1.60 per unit, and fixed costs are $1700 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.60 to $1.70 per unit, and fixed costs will increase by 20%. The company will price the new product at $7 per pack. How will this affect operating income?
A) Operating income will decrease by $2660 per month. B) Operating income will remain unchanged. C) Operating income will decrease by $1060 per month. D) Operating income will increase by $2660 per month.
In Muther's grid the Symbol "X" represents
A) Absolutely necessary. B) Important. C) Unimportant. D) Undesirable.