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NEW QUESTION 44
Sportsman inc. manufactures ceramic sports-related figurines. The company's oldest lines are mass produced in a standard variety of colors and designs. A few years ago in an effort to increase sales, the company began accepting special orders with modified designs in school colors. The minimum order for these special designs is 100 units. The special orders have become very popular and now represent one quarter of the units produced. Estimates for the year follow.

Design costs manufacturing overhead and materials handling costs are budgeted at $700.000 for the year Sportsman has always used a traditional cost allocation system using aired labor hours as the allocation base but is considering an activity based costing system. The most likely result of changing to an activity-based system is that

A. the overhead costs allocated to the special designs will likely increase because the special design requires proportionally more overhead activityB. the overhead costs allocated to the special designs will likely decrease Because demand for them has grownC. total production costs are likely to decline as department are held responsible for their costsD. the costs allocated to each product should not change but management will be able to control various components of the cost more effectively.

Answer: A

 

NEW QUESTION 45
Identify one external factor that provides opportunity for the Food-To-Go division.
Essay
Food Depot Ltd (FDD is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants FDL has been profitable m recent years and has a very strong cash position FDL's newest division. Food-To-Go. is an online meal ordering and delivery platform acquired by FDL two years ago.
In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, industry. It is estimated that Food-To-Go's sales were only 20% of the industry leader's sales However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting.
Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division's budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.
Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).

Answer:

Explanation:
See the Answer below in Explanation details.
Explanation
Chanding trend of consumers to order the food instead of visiting the restaurants

 

NEW QUESTION 46
Which one of me following statements is correct concerning the Sarbanes-Oxley Act of 2002?

A. Corporate executives must personally certify the financial statements and company disclosures under the possibility of imprisonmentB. The five-member Public Company Accounting Oversight Board will be overseen by the AICPA and the FASB working togetherC. A company's Chief Accounting Officer cannot have been employed by the company's audit firm for the five years preceding the auditD. The company's audit firm must be rotated every five years and the lead auditor must be rotated every year

Answer: A

 

NEW QUESTION 47
Harris Company sells two products with the following characteristics.

Harris Company's total sales-mix variance for the year is

A. $350,000 unfavorableB. $300,000 UnfavorableC. $725,000 FavorableD. $375,000 Unfavorable

Answer: D

 

NEW QUESTION 48
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