Critics of Friedman
Why Shouldnt Corporations Be
Christopher D. Stone
Friedmans 3 Supporting Point.
Corporate managers have a responsibility to
the people who own the equity of the
corporation, namely, make the most profit
1 2 * value:
What is The 0051 of 90005 manufactured?
What is The manufacturing averi'lead applied?
11 . vaiue:
Wiliiams Company’s direct labour cost IS 25% ofi'Ls conversion cost. If the manufacturing overhead cost for the iast period is $45,000 and the direct materials cost is $25,000. what is the direct labour cost?
La5‘t month, when 10,000 unit5 ofa product were manufactured. the c051 per unit was $50. At this level of activity variable co5ts were 50% of total unit costs. lf10.500 units are manufactured next month and
cost behaViour patterns re
Which one ofthe following is NOT an activity in the planning and control cycle?
0 Measuring performance.
0 Formulating long and short—term plans.
. Raw materials are released to production far in advance of being needed to ensure no i
8 tral no:
How would the wages offactoryr maintenance personnel usually be claasifl ed?
0 Indirect labour and period coat
. Indirect labour and manufacturing overhead.
0 Direct labour and period coat.
0 Direct labour and manufacturing over
Addy Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is Hot) units. The company has traditionally used direct labour hours as the basis
for applying all manufacturing overhead to products. Pr
The predetermined overhead rate under the traditional cos‘u'ng system is closest to which of the following?
The overhead cost per unit of Product B under the traditional costing system is closest to
2. IDom pute the average preduct cost per bookcase.
v: wrong correct answer is
3. Due to a recession, assume that preduction drops to only 2,300 bookcases per year. Would you expect
the average product cost per bookcase to increase, decrease, or remain un
Lastyear, Waish Company manufactured 25,000 units and sold 22,000 units, Produmion costs were as foliaws:
Direct Werials $100,000
Direct Labour $75,000
Variable Manufactm‘ing Overhead $50,000
Fixed Manufaculring Overhead $75,000
Total sales were $440,000,
1 4 . value:
1Il'I.l'hat is the coat of direct materials. ueed?
1 5 . value:
What would be the ending Work in Preceee account balance?
2. After seeing the income statement in the main body of the problem, management has decided to
eliminate the wheat cereal, because it is not retuming a proﬁt, and to focus all available resources on
promoting the pancake mix.
3. Based on the statement yo
The following additional information about the company is available:
The same equipment is used to mill and pac kage all three products. In the above income statement,
equipment depreciation has been allocated on the basis of sales dollars. An an
1. Prepare a new contribution format segmented income statement tor the month. Adjust the allocations
_ 000,000 0 200,000 s 300,000 s 100,000
Materials, labourﬁr other 204 000 E0 000 126 000 10,000
Total 1.rariable expe
Income statements prepared by the Accounting Department using absorption costing are presented
Sales $1,024,000 $1,564,000
Cost of goods sold:
Beginning inventory 0 235,000
Add cost of goods manufactured 00?,000 00?,000
Goods available for
2 3_ 250 palm Requlred Information
lfthe company’s fixed costs decrease by 20% next year, all other factors remaining the same. by how much will the break-even level change compared to that ofﬂ'ie current year. rounded to the nearest
Foes Florist specializes In large 110ml bouquets for hotels and other commerCIal spaces. The company has provided the following data concerning llS annual overhead costs and its activityrbased coating
W'ages and Salaries $70000
17. 250 pom Hequlred hfonmllon
What would be the total overhead cost per bouquet according to the activity-based costing system. rounded to the nearest whole cent? in other words. what would be the overall activity rate for the
Ma king Bouquets act
16 . value:
ll.Fega Foods Inc. recently purchased a small mill that it intends to operate as one ot its subsidiaries. The
newlv acquired mill offers three products for sal<+wheat cereal, pancake mix, and flour. Each product
sells for $10 per p
Sportway Inc. produces high-quality tennis racquets and golf clubs using a patented forming process and
high-quality hand—ﬁnishing. Products move through two production departments: Forming and Finishing.
The company uses departmen