Question

Wolfpack Company uses job-order costing. At the end of the month, the following data was gathered:

Job #	Total Cost	Complete?	Sold?
803	$611	yes	yes
804	423	yes	no
805	805	no	no
806	682	yes	yes
807	525	yes	no
808	250	no	no
809	440	yes	yes
810	773	yes	no
811	267	no	no
812	341	no	no

Wolfpack’s selling price is cost plus 50% for each of its jobs.

What is the selling price of Job 806?

Select one:

a. $682

b. $1,320

c. $1,023

d. $1,440

e. $920

QUESTION 2:

Which of the following statements about a capital investment project’s internal rate of return is true?

Select one:

a. The internal rate of return is the minimum required rate of return for a project.

b. The internal rate of return indicates the number of years it takes the project’s cash inflows to equal or exceed the project’s cost.

c. The internal rate of return is the actual rate of return of the capital investment project.

d. The internal rate of return is the maximum required rate of return for a project.

QUESTION 3

Raleigh Clothes Ltd. uses job order costing to measure and track product costs. Raleigh has determined that machine hours drive its manufacturing overhead costs. During the month of June, the following data were available for Product #95:

Direct labor 350 hours at $10 per hour

Direct materials 40 square yards at $25 per yard

Machine hours used 1,000 hours

If total manufacturing overhead costs during the month totaled $100,000 when a total of 25,000 machine hours were used, what will be the total manufacturing cost of Product #95?

Select one:

a. $ 3,500

b. $ 4,500

c. $12,500

d. $ 4,000

e. $ 8,500

Answer 1

1)

Given cost of job 806 = $682

Selling price is cost plus 50%

Therefore selling price of job 806 = 682 + 341(i.e.682*50%) = $1,023

Answer: C

2)

Internal rate of return is the rate of return on an investment. It is the rate of return at which discounted cash inflows from a project equals the initial investment. It is the minimum return to be earned on investment. The project should be accepted only if actual rate of return is more than IRR

Answer: A

3)

Total manufacturing overhead cost = $100,000

Total machine hours = 25,000

Therefore Manufacturing overhead per machine hour = 100,000/25,000 = $4 per machine hout

Particulars	Amount $
Direct labor (350 hours * $10)	3,500
Direct material (40*25)	1,000
Manufacturing overhead costs (1000 hours * $4 per hour)	4,000
Total manufacturing cost	8,500

Answer: e