Chapter Four Assignment
Princeton offers a large range of undergraduate courses. The University is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it can more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below:
Semester Student Credit Hours Facilities Cost
Spring 2014 160,000 $750,000
Fall 2017 140,000 $660,000
Using the high-low method, with student credit hours as the activity driver, what is the equation in the form C(x)=vc/u*x+FC for facilities cost as a function of student credit hours?
Diva Products produces scarves. The estimated fixed costs for the year are $164,500, and the estimated variable costs per unit are $9. The company expects to produce and sell 40,000 scarves at a unit selling price of $16 per unit. How much is the break-even point in units?
Chapter Six Assignment
Bayard Backup is a manufacturer of data storage devices. Bayard operates two service departments—maintenance and technology, and two production departments—assembly and testing. Maintenance costs are allocated on the basis of square footage occupied, and technology costs are allocated on the basis of the number of workstations. The following data relate to allocations of service department costs:
Maintenance Technology Assembly Testing
Service department costs $400,000 $230,000
Square footage 2,000 3,000 20,000 30,000
Workstations 4 16 10 30
1. How much maintenance costs will be allocated to the assembly department using the direct method
2. How much technology cost will be allocated to the assembly department using the direct method?
3. How much maintenance cost will be allocated to the testing department using the direct method?
4. How much technology cost will be allocated to the testing department using the direct method?
Chapter Seven Assignment
Havenstock produces lime juice and lime margarita mix. A 500-pound batch of limes costing $70 is processed and results in two components—concentrate and nectar. The labor to achieve this process is $120 per batch. The concentrate is used to produce lime juice and the nectar is used to produce margarita mix. The concentrate is processed into 80 pints of lime juice at a batch cost of $30, and the nectar is processed into 40 bottles of margarita mix at a cost of $20 per batch. The sales price of each pint of juice is $5, and each bottle of margarita mix has a sales value of $2.50. How much is the joint cost allocated to lime juice using the relative sales value method?
Hurley Processors processes clay into two joint products—molding foam and craft blocks. When processed, each pound of clay yields 20 units of foam and 80 units of blocks. Foam sells for $2 per unit and blocks sells for $1.50 per unit. The total cost to process a 100-pound batch of clay is $35. If the physical quantities method is used to allocate the joint costs, how much will be allocated to each batch of modeling foam?
Chapter Eight Assignment
The chief engineer at Wilson Electronics has proposed the production of a digipad to be sold at a 30 percent markup. Management estimates that the fixed costs per year will be $150,000 and the variable cost of the digipad will be $28 per unit. If Wilson sells 30,000 digipads, how much is the selling price of each digipad?
A new product is being designed by an engineering team at Gray Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $135 per unit. The company requires a profit of 30% of selling price. How much is the target cost per unit?