Abdulkarem

2221 WordsApr 4, 20139 Pages
Fundamentals of Cost and Management Accounting Part Four: Allocation of Support Department Costs, Common Costs and Revenues Exercise No. 4 الاسم: الرقم الأكاديمي: رقم الشعبة: Choose the best answer for every question of the following questions: 1) Max's Movie Store encounters revenue-allocation decisions with its bundled product sales. Here, two or more of the movie videos are sold as a single package. Managers at Max's are keenly interested in individual product-profitability figures. Information pertaining to its three bundled products and the stand-alone selling prices of its individual products is as follows: | Stand-Alone Selling Price, |…show more content…
A) $20 B) $22 C) $19 D) $25 Answer: A Explanation: A) [$25 / ($25 + $30)] x $44 = $20 8) Using the incremental method for revenue allocation, what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)? Assume Reading Fun is the primary product, followed by Math Fun, and then Analysis. A) $20 B) $22 C) $19 D) $25 Answer: D Explanation: D) $25 since Reading Fun is the primary product. 9) Using the stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Math Fun in the package that contains all three products? A) $24.12 B) $30.00 C) $22.80 D) $25.33 Answer: C Explanation: C) [$30 / ($25 + $30 + $45)] × $76 = $22.80 10) Using the incremental method, what amount of revenue will be allocated to Math Fun in the package that contains all three products? A) $20 B) $22 C) $19 D) $25 Answer: C Explanation: C) $44 - $25 primary product = $19 11) The Maintenance Department has been servicing Gizmo Production for four years. Beginning next year, the company is adding a Scrap-Processing Department to recycle the materials from Gizmo Production. As a result, maintenance costs are expected to increase from $480,000 per year to $500,000 per year. The Scrap-Processing Department

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