Assume the following information: Sales Variable expenses Contribution margin Fixed expenses Net operating income The degree of operating leverage is: Multiple Choice O O O 2.50. 0.67. 1.50. 0.40. Amount $ 300,000 120,000 180,000 60,000 $ 120,000 Per Unit $ 40 16 $24

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
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Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 5EA: Assume you are the department B manager for Marleys Manufacturing. Marleys operates under a...
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Assume the following information:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income.
The degree of operating leverage is:
Multiple Choice
O
O
Activity Cost Pool
Machining
Machine setups
Product design
OOOO
Show Transcribed Text
Multiple Choice
$205.000
2.50.
$225,000
0.67.
$198.000
1.50.
$249.000
0.40.
Assume a company manufactures only two products-14,000 units of Product A and 6,000 units of Product 8. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing
overhead to three cost pools. The following additional Information is available for the company as a whole and for Products A and B
Activity Measure
Machine-hours
Number of setups
Number of products
Product A Product B
9,000
se
1
Estimated
Overhead
Cost
Activity Measure
Machine-hours
Number of setups
Number of products.
Using the ABC system, how much overhead cost would be assigned from the Machining cost pool to Product A?
6,000
150
1
$ 300,000
$ 150,000
$78,000
Amount
$ 300,000
120,000
180,000
60,000
$ 120,000
3
200 Setups
Expected Activity
12,000 MH
2 Products
C
Per Unit
$40
16
$24
Transcribed Image Text:Assume the following information: Sales Variable expenses Contribution margin Fixed expenses Net operating income. The degree of operating leverage is: Multiple Choice O O Activity Cost Pool Machining Machine setups Product design OOOO Show Transcribed Text Multiple Choice $205.000 2.50. $225,000 0.67. $198.000 1.50. $249.000 0.40. Assume a company manufactures only two products-14,000 units of Product A and 6,000 units of Product 8. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional Information is available for the company as a whole and for Products A and B Activity Measure Machine-hours Number of setups Number of products Product A Product B 9,000 se 1 Estimated Overhead Cost Activity Measure Machine-hours Number of setups Number of products. Using the ABC system, how much overhead cost would be assigned from the Machining cost pool to Product A? 6,000 150 1 $ 300,000 $ 150,000 $78,000 Amount $ 300,000 120,000 180,000 60,000 $ 120,000 3 200 Setups Expected Activity 12,000 MH 2 Products C Per Unit $40 16 $24
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