Fundamentals of Cost Accounting, 7th
Edition
Complete Test Bank | Cost Accounting,
Budgeting & Cost Management
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Trustedscholar
,TEST BANK FOR
Fundamentals of Cost Accounting, 7th Edition by Lanen, Maher
Chapter 1-17
Answers Included
Chapter 01 7e
1) Carley Incorporated incurs many types of costs in its operations. Place the number of the
appropriate stage in the value chain in Column 2 in the blank next to each cost in Column 1.
Cost Stage in the Value Chain
Transportation costs to ship vans to 1. Customer Service
customers
Labor costs for factory workers 2. Distribution
Overtime costs for scientists working on 3. Research &
new engine technology Development
Utilities cost for the design testing 4. Marketing
center
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Costs to survey customers about their 5. Production
satisfaction
Costs to sponsor a sporting event 6. Design
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2) SuperMax is an integrated provider of genetically engineered corn. Many types of costs
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are incurred in its operations. Place the number of the appropriate stage in the value chain in
Column 2 in the blank next to each cost in Column 1.
Cost Stage in the Value
Chain
Warehouse costs to store seed awaiting 1. Customer Service
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shipment to customers
Utility costs for seed mill 2. Distribution
Equipment costs in genetics laboratory 3. Research &
Development
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Labor costs to staff help-line call center 4. Marketing
Costs to prepare advertising campaign in 5. Production
national agriculture magazine
Costs to contract with growers to provide 6. Design
ar
seed
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, 3) Travon's Limo Service provides transportation services in and around Bentonville. Its
profits have been declining, and management is planning to add a package delivery service that
is expected to increase revenue by $275,000 per year. The total cost to lease additional delivery
vehicles from the local dealer is $60,000 per year. The present manager will continue to
supervise all services. However, labor and utilities costs will increase by 40% and rent and other
costs will increase by 15% when the package delivery service is added.
Travon’s Limo Service
Annual Income Statement
Before Expansion
Sales Revenue $ 960,000
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Costs:
Vehicle Leases $ 400,000
Labor 290,000
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Utilities 50,000
Rent 100,000
Other Costs 60,000
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Manager’s Salary 120,000
Total Costs 1,020,000
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Operating Profit (Loss) $ (60,000)
a. Prepare a report of the differential costs and revenues if the delivery service is added.
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b. Should management start up the delivery service? Explain your answer.
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, 4) Morris Incorporated is a management consulting firm that specializes in management
training programs. Tackle Manufacturing Incorporated has approached Morris to contract for
management training for a one-year period. Last year's income statement for Morris is as
follows:
Sales Revenue $ 360,000
Costs:
Labor $ 120,000
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Equipment Lease 12,000
Rent 24,000
us
Utilities 8,400
Supplies 23,600
Other Costs 14,400
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Manager’s Salary 80,000
Total Costs 282,400
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Operating Profit (Loss) $ 77,600
To satisfy the Tackle contract, another part-time trainer will need to be hired at $42,000.
Supplies will increase by 12% and other costs will increase by 15%. In addition, new equipment
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will need to be leased at a cost of $2,500.
a. What are the differential costs that would be incurred if the Tackle contract is signed?
b. If Tackle will pay $55,000 for one year, should Morris accept the contract? Explain your
answer.
ol
ar
Trustedscholar
Edition
Complete Test Bank | Cost Accounting,
Budgeting & Cost Management
Tr
us
te
ds
ch
ol
ar
Trustedscholar
,TEST BANK FOR
Fundamentals of Cost Accounting, 7th Edition by Lanen, Maher
Chapter 1-17
Answers Included
Chapter 01 7e
1) Carley Incorporated incurs many types of costs in its operations. Place the number of the
appropriate stage in the value chain in Column 2 in the blank next to each cost in Column 1.
Cost Stage in the Value Chain
Transportation costs to ship vans to 1. Customer Service
customers
Labor costs for factory workers 2. Distribution
Overtime costs for scientists working on 3. Research &
new engine technology Development
Utilities cost for the design testing 4. Marketing
center
Tr
Costs to survey customers about their 5. Production
satisfaction
Costs to sponsor a sporting event 6. Design
us
te
2) SuperMax is an integrated provider of genetically engineered corn. Many types of costs
ds
are incurred in its operations. Place the number of the appropriate stage in the value chain in
Column 2 in the blank next to each cost in Column 1.
Cost Stage in the Value
Chain
Warehouse costs to store seed awaiting 1. Customer Service
ch
shipment to customers
Utility costs for seed mill 2. Distribution
Equipment costs in genetics laboratory 3. Research &
Development
ol
Labor costs to staff help-line call center 4. Marketing
Costs to prepare advertising campaign in 5. Production
national agriculture magazine
Costs to contract with growers to provide 6. Design
ar
seed
Trustedscholar
, 3) Travon's Limo Service provides transportation services in and around Bentonville. Its
profits have been declining, and management is planning to add a package delivery service that
is expected to increase revenue by $275,000 per year. The total cost to lease additional delivery
vehicles from the local dealer is $60,000 per year. The present manager will continue to
supervise all services. However, labor and utilities costs will increase by 40% and rent and other
costs will increase by 15% when the package delivery service is added.
Travon’s Limo Service
Annual Income Statement
Before Expansion
Sales Revenue $ 960,000
Tr
Costs:
Vehicle Leases $ 400,000
Labor 290,000
us
Utilities 50,000
Rent 100,000
Other Costs 60,000
te
Manager’s Salary 120,000
Total Costs 1,020,000
ds
Operating Profit (Loss) $ (60,000)
a. Prepare a report of the differential costs and revenues if the delivery service is added.
ch
b. Should management start up the delivery service? Explain your answer.
ol
ar
Trustedscholar
, 4) Morris Incorporated is a management consulting firm that specializes in management
training programs. Tackle Manufacturing Incorporated has approached Morris to contract for
management training for a one-year period. Last year's income statement for Morris is as
follows:
Sales Revenue $ 360,000
Costs:
Labor $ 120,000
Tr
Equipment Lease 12,000
Rent 24,000
us
Utilities 8,400
Supplies 23,600
Other Costs 14,400
te
Manager’s Salary 80,000
Total Costs 282,400
ds
Operating Profit (Loss) $ 77,600
To satisfy the Tackle contract, another part-time trainer will need to be hired at $42,000.
Supplies will increase by 12% and other costs will increase by 15%. In addition, new equipment
ch
will need to be leased at a cost of $2,500.
a. What are the differential costs that would be incurred if the Tackle contract is signed?
b. If Tackle will pay $55,000 for one year, should Morris accept the contract? Explain your
answer.
ol
ar
Trustedscholar
