Management advisory services page 3 number 6 abc

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MANAGEMENT ADVISORY SERVICES Page 3 Number 6 (ABC SYSTEM) Elaine Hospital plans to use the activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs: Activity Activity Rate Room and meals P150 per day Radiology P95 per image Pharmacy P28 per physician order Chemistry lab P85 per test Operating room P550 per operating room hour The records of two representative patients were analyzed, using the activity rates. The activity information associated with the two patients are as follows: Patient 1 Patient 2 Number of days 7 3 Number of images 4 2 Number of physician orders 5 1 Number of tests 6 2 Number of operating room hours 4.5 1 What is the activity cost associated with Patient? A.1,388 B. 908 C. 1,816 D. 4,555 Number 7 (ABC SYSTEM) Balat Leather Works, which manufactures saddles and other leather goods, has three departments. The Assembly Department manufactures various leather products, such as belts, purses, and saddle bags, using automated production process. The Saddle Department produces handmade saddles and uses very little machinery. The Tanning Department produces leather. The tanning process requires little in the way of labor or machinery, but it does require space and process time. Due to the different production processes in the three departments, the company uses three different cost drivers for the application of manufacturing overhead. The cost drivers and overhead rates are as follows: Cost Driver Predetermined Overhead Rate Tanning Department Square-feet of leather P3 per square-foot Assembly Department Machine time P9 per machine hour Saddle Department Direct-labor time P4 per direct labor hour The company’s deluxe saddle and accessory set consists of handmade saddle, two saddlebags, a belt, and a vest, all coordinated to match. The entire set uses 100 square-feet of leather from the Tanning Department, 3 machine hours in the Assembly Department, and 40 direct-labor hours in the Saddle Department. The company is processing Job No. 20 consisting of 20 deluxe saddle and accessory sets. How much is the applied manufacturing overhead in the Assembly Department for Job No. 20? A. 3,200
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MANAGEMENT ADVISORY SERVICES Page 4 B. 540 C. 6,000 D. 3,000 Number 8 (CVP AND BREAKEVEN ANALYSIS) Harry Manufacturing incurs annual fixed costs of P250,000 in producing and selling a single product. Estimated unit sales are 125,000. An after-tax income of P75,000 is desired by management. The company projects its income tax rate at 40 percent. What is the maximum amount that Harry can expend for variable costs per unit and still meet its profit objective if the sales price per unit is estimated at P6? A.3.37 B.3.59 C.3.00 D.3.70 Number 9 ( CVP AND BREAKEVEN ANALYSIS) For its most recent fiscal year, a firm reported that its contribution margin was equal to 40 percent of sales and that its net income amounted to 10 percent of sales. If its fixed costs for the year were P60,000, how much was the margin of safety?
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