Exam Practice

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1.First Bank had the following activities, traceable costs, and physical flow of driver units:

TraceablePhysical Flow of
Activities CostsDriver Units
Open new accounts$40,0001,000 accounts
Process deposits72,000360,000 deposits
Process withdrawals100,000200,000 withdrawals

The above activities are used by Downtown branch and Uptown branch: DowntownSuburb
New accounts200400
Deposits 40,00020,000
Withdrawals 15,00018,000

a.Compute the new account cost assigned to Downtown branch.
b.Compute deposit processing cost assigned to Suburb branch.
c.Compute the withdrawal processing cost
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Additional sales: (2,000 x $120) $240,000
Relevant costs: Variable costs:
Direct materials (2,000 x $15) $30,000
Direct mfg. labor (2,000 x $45) 90,000
Variable mfg. overhead (2,000 x $25) 50,000 Total 170,000
Additional operating income$70.000
4.Strangle Company manufactures ties. When 28,000 items are produced, the costs per unit are:
Direct materials $0.60 Direct manufacturing labor 3.00
Variable manufacturing overhead 1.20
Fixed manufacturing overhead 1.60
Variable selling0.80
Fixed selling1.13 Total $8.30

The ties normally sell for $22 each. Strangle Company has received a special order for 2,000 ties at $10.00 per tie. Strangle Company has excess capacity.
Compute the amount by which the operating income would change if the order were accepted.


Additional sales (2,000 x $10.00)$20,000
Relevant costs:
Direct materials (2,000 x $0.60)$1,200
Direct labor 2,000 x $3.00) 6,000
Variable manufacturing overhead 2,400
(2,000 x $1.20)
Variable selling (2,000 x $0.80) 1,60011,200
Additional operating income$8,800
CHAPTER 35.Colbert Company gathered the following information regarding its only product:
Direct materials used$9,000
Direct labor17,000
Variable factory overhead13,000
Fixed factory

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