Chapter 22
1. We sell peaches that sell for different amounts based on their quality.
#1 sell for $1.50 per lb.; #2 sell for $1.00 per lb. and #3 sell for $0.20 per lb.
We can sell 300,000 Ibs. of#1, 300,000 Ibs. of #2 and 750,000 Ibs. of #3.
Our total costs of producing the peaches are $472,500.
Required:
a. How much of the cost should be allocated to each quality of peach?
b. How much is the cost per pound of peaches?
2. Alpha company has 4 departments. A & B are support departments, 1 & 2 are selling departments.
Use the following information to complete the Departmental Expenses Allocation
Spreadsheet and the supporting schedules.
Sales
Payroll expenses
Square footage
# of employees
Dept. A
$10,000
200
De t. B
$20,000
200
Dept. 1
$200,000
$30,000
1,200
10
Dept. 2
$300,000
$40,000
1,400
15
Utilities expense for the year is $50,000 that is allocated to the departments based on square footage.
Department A costs are allocated based on sales and Department B costs are allocated based on # of employees.
Payroll expenses are considered to be direct expenses and utilities are indirect expenses. pg. "1 3. Alexander Bruce and Jonathon Wayne are managers of two product lines for
Gotham Incorporated. One of them is a candidate for promotion based on performance.
Using the following data:
Revenue Costs Average assets
Bruce
$205,000
189,000
300,000
Wayne
$270,000
232,000
290,000
a. Calculate the residual income (assume a target income of 10 return on assets) and the investment center return on assets. b. Indicate which manager should be recommended for promotion and why. Chapter 23 1. A company inadvertently produced 5,000 defective portable MP3 players. The players cost
