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1. It is estimated that the cost of electricity to run a machine for an entire 8-hour shift is \$16. The machine can produce 200 units of product for each hour of operation. How much electricity cost is allocated to each unit of product?
\$0.01
\$0.10
\$1.00
cannot calculate from the information given

2. Sebastian, an investment center manager in RKH Corporation, is trying to boost the current period's return on investment. Which of the following actions will achieve that goal?
purchasing a new piece of equipment on the last day of the fiscal
year
raising commission rates for salespeople from 3% to 4%
delaying preventive maintenance on existing equipment until next
year
all of the above will increase the current period's ROI

3. Hamilton has budgeted total manufacturing overhead costs for the year as \$125,000 based on 20,000 direct labor hours. The ratio of variable manufacturing overhead costs to fixed manufacturing overhead costs is 2:1. In a given month 2,000 direct labor hours are budgeted for production. How much overhead is budgeted?
\$12,500.00
\$11,805.55
\$11,110.42
\$10,416.67

#### Solution Preview

1. It is estimated that the cost of electricity to run a machine for an entire 8-hour shift is \$16. The machine can produce 200 units of product for each hour of operation. How much electricity cost is allocated to each unit of product?
a Â Â Â Â Â Â Â Â \$0.01
b Â Â Â Â Â Â Â Â \$0.10
c Â Â Â Â Â Â Â Â \$1.00
d Â Â Â Â Â Â Â Â cannot calculate from the information given

Answer: a Â Â Â Â Â Â Â Â \$0.01
Number of units produced in a 8-hour shift = 200 x 8 = 1600
Cost of electricity for a 8-hour shift= \$16

Therefore cost allocated to each ...