1. Determination of per Unit Total Costs.

The estimated unit costs for Hoteling Industries, when operating at a production and sales level of 10,000 units, are as follows: Cost Item Direct materials.............................. Direct la#or.................................... $aria#le factor% overhead.............. 'i(ed factor% overhead.................. $aria#le mar)eting......................... 'i(ed mar)eting............................. Required: ,1,.,+,*Identif% the estimated conversion cost per unit. Identif% the estimated prime cost per unit. Determine the estimated total varia#le cost per unit. Compute the total cost that would #e incurred during a month with a production level of 10,000 units and a sales level of 1.,000 units. stimated Unit Cost !1" 10 & " * +

.. Components of /anufacturing Cost. 01TI 221 Inc. produces video cameras. The direct la#or cost of one camera is !.00, and the total manufacturing cost is !3"0. The overhead cost of one camera is two4thirds as large as its conversion cost. Required: ,1,.,+Compute the conversion cost per unit. Determine the factor% overhead cost per unit. Determine the direct materials cost per unit.

+.0 compan% allocates its varia#le factor% overhead #ased on direct la#or hours. During the past three months, the actual direct la#or hours and the total factor% overhead allocated were as follows: Direct la#or hours.......................... Total factor% overhead allocated..................... 5cto#er .,"00 !&0,000 1ovem#er +,000 !6",000 Decem#er ",000 !100,000

7ased upon this information, the estimated varia#le cost per direct la#or hour was ,high low method-: 0. !.1." 7. !1.."0 C. !.0& D. !& . none of the a#ove *.'or a simple regression4anal%sis model that is used to allocate factor% overhead, an internal auditor finds that the intersection of the line of #est fit for the overhead allocation on the %4 a(is is !"0,000. The slope of the trend line is ..0. The independent varia#le, factor% wages, amounts to !800,000 for the month. 9hat is the estimated amount of factor% overhead to #e

allocated for the month: 0. !810,000 7. !8"0,000 C. ! "0,000 D. !1&0,000 . !.+0,000 ".$aria#le costs, fi(ed costs, relevant range /5H 221 Candies manufactures ;aw4#rea)er candies in a full% automated process. The machine that produces candies was purchased recentl% and can ma)e *,000 per month. The machine costs !3,000 and is depreciated using straight line depreciation over ten %ears assuming <ero residual value. =ent for the factor% space and warehouse, and other fi(ed manufacturing overhead costs total !1,000 per month. /5H 221 currentl% ma)es and sells +,000 ;aw4#rea)ers per month. /5H 221 #u%s ;ust enough materials each month to ma)e the ;aw4#rea)ers it needs to sell. /aterials cost 10 cents per ;aw#rea)er. 1e(t %ear /5H 221 e(pects demand to increase #% 100>. 0t this volume of materials purchased, it will get a 10> discount on price. =ent and other fi(ed manufacturing overhead costs will remain the same. Required: 1. 9hat is /5H 221?s current annual relevant range of output: .. 9hat is the annual fi(ed manufacturing cost within the relevant range: 9hat is the varia#le manufacturing cost: +. 9hat will /5H 221?s relevant range of output #e ne(t %ear: How if at all, will fi(ed and varia#le manufacturing costs change ne(t %ear: 0ssume the costs and depreciation of second machine are li)e the first machine. This will add !300 of depreciation per %ear.