153. Bill Pope has developed a new device that is so exciting he is considering quitting his job in. 1 answer below »

 
   

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadlines.  

153. Bill
Pope has developed a new device that is so exciting he is considering quitting
his job in order to produce and market it on a large-scale basis. Bill will
rent a garage for $300 per month for production purposes. Utilities will cost
$40 per month. Bill has already taken an industrial design course at the local
community college to help prepare for this venture. The course cost $300. Bill
will rent production equipment at a monthly cost of $800. He estimates the
material cost per unit will be $5, and the labor cost will be $3. He will hire
workers and spend his time promoting the product. To do this he will quit his
job which pays $3,000 per month. Advertising and promotion will cost $900 per
month.

Required:

Complete
the chart below by placing an “X” under each heading that helps to
identify the cost involved. There can be “Xs” placed under more than
one heading for a single cost, e.g., a cost might be a sunk cost, an overhead
cost and a product cost; there would be an “X” placed under each of
these headings opposite the cost.
.0/msohtmlclip1/01/clip_image001.jpg”>

* Between
the alternatives of going into business to make the device or not going into
business to make the device.

154.Laco Company acquired
its factory building about 20 years ago. For a number of years the company has
rented out a small, unused part of the building. The renter’s lease will expire
soon. Rather than renewing the lease, Laco Company is considering using the
space itself to manufacture a new product. Under this option, the unused space
will continue to be depreciated on a straight-line basis, as in past years.
Direct materials and direct labor cost for the new product would be $50 per
unit. In order to have a place to store finished units of the new product, the
company would have to rent a small warehouse nearby. The rental cost would be
$2,000 per month. It would cost the

Page
19 of 73

company an additional $4,000 each month
to advertise the new product. A new production supervisor would be hired to
oversee production of the new product who would be paid $3,000 per month. The
company would pay a sales commission of $10 for each unit of product that is
sold.

Required:

Complete
the chart below by placing an “X” under each column heading that
helps to identify the costs listed to the left. There can be “X’s”
placed under more than one heading for a single cost. For example, a cost might
be a product cost, an opportunity cost, and a sunk

cost; there
would be an “X” placed under each of these headings on the answer
sheet opposite the cost.
.0/msohtmlclip1/01/clip_image002.jpg”>

*Between the
alternatives of (1) renting the space out again or (2) using the space to
produce the new product.

155.
Lettman Corporation has provided the following partial listing of costs
incurred during November:
.0/msohtmlclip1/01/clip_image003.jpg”>

Required:

a. What is the total amount of product
cost listed above? Show your work. b. What is the total amount of period cost
listed above? Show your work.

156.
A partial listing of costs incurred at Starr Corporation during June appears
below:
.0/msohtmlclip1/01/clip_image004.jpg”>

Required:

a. What is the total amount of product
cost listed above? Show your work. b. What is the total amount of period cost
listed above? Show your work.

157. The
following information summarizes the company’s cost structure:

Page
20 of 73
.0/msohtmlclip1/01/clip_image005.jpg”>

Required:

Estimate
the following costs at the 40,000 unit level of activity: a. Total variable
cost.
b.
Total fixed cost.
c.
Variable cost per unit.
d. Fixed
cost per unit.

158. Corio
Corporation reports that at an activity level of 3,800 units, its total
variable cost is $221,464 and its total fixed cost is $94,848. Required:
For
the activity level of 3,900 units, compute: (a) the total variable cost; (b)
the total fixed cost; (c) the total cost; (d) the average variable cost per
unit; (e) the average fixed cost per unit; and (f) the average total cost per
unit. Assume that this activity level is within the relevant range.

159. At
an activity level of 5,900 units, Haas Corporation’s total variable cost is
$347,982 and its total fixed cost is $284,321. Required:

For
the activity level of 6,100 units, compute: (a) the total variable cost; (b)
the total fixed cost; (c) the total cost; (d) the average variable cost per
unit; (e) the average fixed cost per unit; and (f) the average total cost per
unit. Assume that this activity level is within the relevant range.

160. A
number of costs and measures of activity are listed below.
.0/msohtmlclip1/01/clip_image006.jpg”>

Required:

For
each item above, indicate whether the cost is MAINLY fixed or variable with
respect to the possible measure of activity listed next to it.

161.

A
number of costs and measures of activity are listed below.

Page
21 of 73
.0/msohtmlclip1/01/clip_image007.jpg”>

Required:

For
each item above, indicate whether the cost is MAINLY fixed or variable with
respect to the possible measure of activity listed next to it.