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ABC company uses activity-based costing (ABC). The company makes products A and B Number of cost driver units product B Total cost in cost pool product A Cost pool 30 20 $12,000 pool 1 5 20 $5,000 12 pool 2 30 $42.000 pool 3 Compute allocated capacity costs for product A. O $59.000 O $4.800 O $30.000 o not enough information -- need to know the total number of cost driver units O $38.800 Which of the following are reasonable ways to deal with excess demand? (select ALL correct answers) reduce prices use all available capacity to make the product with the highest CM per unit of capacity reduce advertising increase advertising You have the following data for product X: sales revenue $14,000, allocated fixed costs $20,000, variable costs $12,000. You cannot increase the price of product X or improve the production process to increase profitability. What should you do about product X? drop the product both in the short term and in the long term o keep the product both in the short term and in the long term o keep the product in the short term and drop it in the long term drop the product in the short term and keep it in the long term O do nothing - unprofitable products are just one of the costs of doing business The inventory policy is to have ending inventory equal to 20% of next month's sales. June July August Desired ending inventory ? ? ? ? ? ? Beginning inventory Budgeted sales Budgeted production ? 120 200 ? ? 190 Compute budgeted production for July not enough information O 160 104 136 O 120 The inventory policy is to have ending inventory equal to 20% of next month's sales. June July August ? 2 ? ? ? Desired ending inventory Beginning inventory Budgeted sales Budgeted production ? ? 120 200 ? ? 190 Compute ending inventory for August 0 40 O 30 50 0 24 O not enough information

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