ACCT 567 Week 8 Final Exam

1. (TCO A) On what should the government-wide financial statements report? (Points : 5)

Net position and results of the financial operations of the government as a whole.
Budgetary Compliance
The cost of government services
Fiscal accountability

2. (TCO B) According to GASB standards, when should transfers be recognized? (Points : 5)

When earned.
When collected in cash.
When authorized by the budget ordinance.
In the period the interfund receivable and payable arise.

3. (TCO C) Comparisons of budgeted versus actual revenues and expenditures are a requirement of which of the following situations? (Points : 5)

Required by GAAP for the general fund and major special revenue funds for which an annual budget has been legally adopted.
Required by GAAP for all government fund types.
Required by GAAP for internal management reports only, they are not permitted for external financial reporting.
It is optional under GASB standards for all funds.

4. (TCO D) The revenues account of a government entity is debited when (Points : 5)

the budget is recorded at the beginning of the year.
property taxes are recorded.
the account is closed to fund balance-unassigned at the end of the year.
property taxes are collected.

5. (TCO E) During the year, a wealthy local businessman donated a building to city of Perris. The original cost of the building was $340,000. Accumulated depreciation at the date of the gift amounted to $220,000. The appraised fair market value of the donation at the date of the gift was $525,000 of which $35,000 was the value of the land on which the building was situated. At what amount should the city record this donated property in the governmental activities accounts at the government-wide level? (Points : 5)

$220,000.
$120,000.
$340,000.
$525,000.

6. (TCO E) Which of the following resource inflows would be recorded as a revenue of a debt service fund? (Points : 5)

Receipt of the premium on a new bond issue.
Property taxes levied by the debt service fund for debt service purposes.
Taxes collected by the General Fund and transferred to the debt service fund.
Transfer of the residual equity of a capital projects fund to the debt service fund.

7. (TCO G) Which of the statements concerning agency funds is a true statement? (Points : 5)

Agency funds use the same basis of accounting as permanent funds.
Agency funds are reported only on the statement of fiduciary net position.
Agency funds use the temporary accounts—Additions and Deductions.
Agency funds never receive cash.

8. (TCO J) Which of the following items are typically reported differently between the governmental fund statements and the governmental activities column of the government-wide statements? (Points : 5)

Inventories
Cash collected on property taxes receivable
Capital outlays
Accounts Payable and other accrued expenses

9. (TCO H) A condition whereby the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis is called a(an) (Points : 5)

system design weakness.
deficiency.
unacceptable reportable condition.
audit alert item.

10. (TCO H) Under FASB Standards, how would a not-for-profit organization recognize a conditional pledge? (Points : 5)

It would disclose the amount of the conditional pledge in the notes to the financial statements.
It would debit Pledges Receivable and credit Deferred Contributions.
It would debit Pledges Receivable and credit Contributions—Temporarily Restricted.
It would not recognize the conditional pledge until pledge conditions are substantially met.

11. (TCO I) Which of the following items would not affect the amounts reported in the Revenues and Gains section of the statement of activities for a private college or university? (Points : 5)

Student tuition and fees
Net assets released from restriction
Tuition and fees discounts and allowances
Deferred revenues

12. (TCO I) The primary source of revenues for most hospitals are (Points : 5)

investment income.
capitation fees from health maintenance organizations.
exchange transactions, such as fees for services.
nonexchange transactions, such as contributions.

1. (TCOs D, E, F, and G) Please list the name of the fund(s) in which each of the following transactions or events would be recorded

2. (TCO F) The garbage collection of the city of Rockwell could be accounted for through the General Fund, a Special Revenue Fund, or an Enterprise Fund. Please identify the circumstances in which each of these fund types might be appropriate. (Points : 40)

3. (TCO I) During the fiscal year of June 2012, Jefferson General Hospital, a not-for-profit healthcare organization, had the following revenue-related transactions. (The amounts are summarized for the entire year.)

4. (TCO E) Enter the template provided in the answer space and record the following transactions in the Capital Projects Fund in the general journal for the following transactions.

5. (TCO F) The following Statement of Cash Receipts and Disbursements was prepared by the bookkeeper of the City of Glass City Museum of Science. The museum is a component unit of the City of Glass City and must be included in the city’s financial statements. It began operations on January 1, 2012 with no liabilities or commitments and only two assets.

(1) $6,000 in cash and (2) Land that was acquired for $11,000.

ACCT-505 Week 4 Midterm Exam

1.

Question :

(TCO A) Wages paid to an assembly line worker in a factory are a

2.

Question :

(TCO A) A cost incurred in the past that is not relevant to any current decision is classified as a(n)

3.

Question :

(TCO A) Depreciation of office buildings and office equipment is also known as

4.

Question :

(TCO A) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following?

5.

Question :

(TCO F) Which of the following statements is true?

I. Overhead application may be made slowly as a job is worked on.

II. Overhead application may be made in a single application at the time of completion of the job.

III. Overhead application should be made to any job not completed at year end in order to properly value the work in process inventory.

6.

Question :

(TCO F) A job-order cost system is employed in those situations where

7.

Question :

(TCO F) The FIFO method only provides a major advantage over the weighted-average method in that

8.

Question :

(TCO B) The contribution margin ratio always decreases when the

9.

Question :

(TCO B) Which of the following would not affect the break-even point?

10.

Question :

(TCO E) In an income statement prepared using the variable costing method, variable selling and administrative expenses would

1.

Question :

(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just-completed year:

Sales.................................................................................

$910

Purchases of raw materials................................................

$225

Direct labor.......................................................................

$245

Manufacturing overhead....................................................

$265

Administrative expenses....................................................

$150

Selling expenses................................................................

$140

Raw materials inventory, beginning.....................................

$15

Raw materials inventory, ending.........................................

$45

Work-in-process inventory, beginning.................................

$20

Work-in-process inventory, ending.....................................

$55

Finished goods inventory, beginning...................................

$100

Finished goods inventory, ending.......................................

$135

Required: Prepare a Schedule of Cost of Goods Manufactured in the text box below.

2.

Question :

(TCO F) The Illinois Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

Percentage Completed
Units Materials Conversion
Work in process, June 1 150,000 75% 55%
Work in process, Jun 30 145,000 85% 75%

The department started 475,000 units into production during the month and transferred 480,000 completed units to the next department.

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

3.

Question :

(TCO B) A tile manufacturer has supplied the following data:

Boxes of tile produced and sold 625,000

Sales revenue $2,975,000

Variable manufacturing expense $1,720,000

Fixed manufacturing expense $790,000

Variable selling and admin expense $152,000

Fixed selling and admin expense $133,000

Net operating income $180,000

Required:

a. Calculate the company's unit contribution margin.

b. Calculate the company's unit contribution ratio.

c. If the company increases its unit sales volume by 5% without increasing its fixed expenses, what would the company's net operating income be?

4.

Question :

(TCO E) Lehne Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price

$ 125

Units in beginning inventory

600

Units oroduced

3000

Units sold

3500

Units in ending inventory

100

Variable costs per unit:

Direct materials

$ 15

Direct labor

$ 50

Variable manufacturing overhead

$ 8

Variable selling and admin

$ 12

Fixed costs:

Fixed manufacturing overhead

$ 75,000

Fixed selling and admin

$ 20,000

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required:

a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing method.
d. Prepare an income statement for the month using the absorption costing method.

ACCT-504 Final Exam - 3 different finals

1. (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships? (Points : 5)
Reduced legal liability for investors
Harder to transfer ownership
Lower taxes
Most common form of organization

2. (TCO A) When a corporation distributes a dividend, _____. (Points : 5)
the most common form of distribution is a cash dividend
the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit

3. (TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500

What did Cerner Company show as total credits? (Points : 5)
$21,500
$21,000
$20,500
$22,000

4. (TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)
when they are incurred, whether or not cash is paid
when they are incurred and paid at the same time
if they are paid before they are incurred
if they are paid after they are incurred

5. (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO

6. (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)
$48,000
$52,500
$49,500
$43,500

7. (TCOs D, G) Joyce Corporation issues 1,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal entry to record the issuance will show a _____. (Points : 5)
debit to Cash of $1,020,000
debit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $1,020,000
credit to Cash for $1,000,0008. (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
$240,000
$250,000
$310,000
$230,000

9. (TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)
nonlinear analysis
vertical analysis
trend analysis
common-size analysis

10. (TCO F) Comparisons of data within a company are an example of the following comparative basis. (Points : 5)
Industry averages
Intercompany
Intracompany
Interregional

11. (TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)
Liquidity
Profitability
Marketability of the product
Solvency

12. (TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)
solvency
liquidity
marketability
profitability

13. (TCO F) Long-term creditors are usually most interested in evaluating _____. (Points : 5)
liquidity
marketability
profitability
solvency

14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate

1. (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships? (Points : 5)

Reduced legal liability for investors
Harder to transfer ownership
Lower taxes
Most common form of organization

2. (TCO A) When a corporation distributes a dividend, _____. (Points : 5)

the most common form of distribution is a cash dividend
the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit

3. (TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500

What did Cerner Company show as total credits? (Points : 5)

$21,500
$21,000
$20,500
$22,000

4. (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____. (Points : 5)

sales under $1,000,000
no accountants on staff
insignificant receivables and payables
all sales and purchases on account

5. (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)

LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO

6. (TCOs A, E) Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be _____. (Points : 5)

$14,160
$11,760
$9,840
$9,600

7. (TCOs D, G) Mendez Corporation issues 2,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 103. The journal entry to record the issuance will show a _____. (Points : 5)

debit to Cash of $2,000,000
debit to Premium on Bonds Payable for $60,000
credit to Bonds Payable for $2,000,000
credit to Cash for $2,060,000

8. (TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)

$120,000
$125,000
$155,000
$115,000

9. (TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)

nonlinear analysis
vertical analysis
trend analysis
common-size analysis

10. (TCO F) In a common-size balance sheet, the 100% figure is _____. (Points : 5)

total current assets
total property, plant, and equipment
total liabilities
total assets

11. (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points : 5)

net sales
salary and wages expense in a previous year
gross profit
net income

12. (TCO F) A common measure of profitability is the _____. (Points : 5)

current ratio
current cash debt coverage ratio
return on common stockholder's equity ratio
debt to total assets

13. (TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)

profit margin and debt-to-total-assets ratio
profit margin and asset-turnover ratio
times interest earned and debt-to-stockholders equity ratio
profit margin and free cash flow

14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)

find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate

1. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5)

it has limited life
its owner's personal resources are at stake
its ownership is easily transferable via the sale of shares of stock
it is simple to establish

2. (TCO A) When a corporation distributes a dividend, _____. (Points : 5)

the most common form of distribution is a cash dividend
the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit

3. (TCOs A, B) Below is a partial list of account balances for Denton Company:

Cash $7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Common stock 1,400
Dividends 700
Revenues 21,000
Expenses 17,500

What did Denton Company show as total credits? (Points : 5)

$30,100
$29,400
$28,700
$30,800

4. (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____. (Points : 5)

sales under $1,000,000
no accountants on staff
insignificant receivables and payables
all sales and purchases on account

5. (TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the lowest amount of income tax expense? (Points : 5)

FIFO
LIFO
The average cost method
Income tax expense for the period will be the same under all assumptions.

6. (TCOs A, E) Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be _____. (Points : 5)

$14,160
$11,760
$9,840
$9,600

7. (TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a _____. (Points : 5)

debit to Cash of $500,000
credit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $480,000
debit to Cash for $480,000

8. (TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)

$120,000
$125,000
$155,000
$115,000

9. (TCO F) Which one of the following is not a tool in financial statement analysis? (Points : 5)

Horizontal analysis
Circular analysis
Vertical analysis
Ratio analysis

10. (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points : 5)

net sales
salary and wages expense in a previous year
gross profit
net income

11. (TCO F) Ratios are most useful in identifying _____. (Points : 5)

trends
differences
causes
relationships among different numbers

12. (TCO F) A common measure of liquidity is _____. (Points : 5)

return on assets
current ratio
profit margin
debt to equity

13. (TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)

profit margin and debt-to-total-assets ratio
profit margin and asset-turnover ratio
times interest earned and debt-to-stockholders equity ratio
profit margin and free cash flow

14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)

find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate

1. (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report:
.........................................................................................................................................................................

Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders’ equity ratio. (Make sure to show all your work)


2. (TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:
........................................................................................................................................................................................................................

Required:

Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results.

3. (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:

................................................................................................................................................................................................................

Required:

1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections.

2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.

4. (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”

Assuming the goal is to maximize net income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.

Required:

a. Goforit carries significant electronics inventory in a competitive environment where prices are actually falling. Which inventory valuation method would you choose—LIFO, FIFO, or average cost? Assume that unit purchases exceed unit sales.

b. Goforit has a large investment in warehouse equipment including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: Straight line (SL) or double declining balance (DDB)?

5. (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.

..................................................................................................................................................................................................................

Required:

1) Please explain the meaning of each of the Pfizer ratios above.

2) Please state which company performed better for each ratio.

ACCT-504 Accounting Finance - Managerial Use and Analysis - Complete Course + Final Exam

Week 3 - Case Study 1 - The Complete Accounting Cycle - Flower Landscaping Corporation)

Week 4 Midterm

Week 5 - Case Study 2 (Internal Control - LJB Company)

Week 6 - Case Study 3 (Cash Budgeting - Cambridge Company)

Week 7 - Course Project (A Comparative Analysis of Kohl’sCorporation and J.C. Penney Corporation)

All 7 Weeks Discussions

ACCT-504 Final Exam

ACCT-434 Week 4 Midterm Exam

1.

Question :

(TCO1) ABC systems create

2.

Question :

(TCO 1) Merriamn Company provides the following ABC costing information:

Activities

Total Costs

Activity-cost drivers

Account inquiry hours

$400,000

10,000 hours

Account billing lines

$280,000

4,000,000 lines

Account verification accounts

$150,000

40,000 accounts

Correspondence letters

$ 50,000

4,000 letters

Total costs

$880,000

The above activities are used by Department A and B as follows:

Department A

Department B

Account inquiry hours

2,000 hours

4,000 hours

Account billing lines

400,000 lines

200,000 lines

Account verification accounts

10,000 accounts

8,000 accounts

Correspondence letters

1,000 letters

1,600 letters

How much of the account billing cost will be assigned to Department B?

3.

Question :

(TCO 2) A master budget

4.

Question :

(TCO 2) Dalyrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?

5.

Question :

(TCO 3) Which cost estimation method analyzes accounts in the subsidiary ledger as variable, fixed, or mixed using qualitative methods?

6.

Question :

(TCO 4) In evaluating different alternatives, it is useful to concentrate on

7.

Question :

(TCO 5) The theory of constraints is used for cost analysis when

8.

Question :

(TCO 5) Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:

Direct materials

$45,000

Direct labor

65,000

Variable factory overhead

30,000

Fixed factory overhead

70,000

Total costs

$210,000

Of the fixed factory overhead costs, $30,000 is avoidable.

Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $18 per unit. Assuming there is no other use for the facilities, Schmidt should

9.

Question :

(TCO 3) The cost function + 10X

10.

Question :

(TCO 4) Sunk costs

1.

Question :

(TCO 1) For each of the following drivers identify an appropriate activity.

a. # of machines

b. # of setups

c. # of inspections

d. # of orders

e. # of runs

f. # of bins or aisles

g. # of engineers

2.

Question :

(TCO 2) Favata Company has the following information:

Month Budgeted Sales

June $60,000

July 51,000

August 40,000

September 70,000

October 72,000

In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales.

Prepare a purchases budget for July through September.

3.

Question :

(TCO 3) Patrick Ross, the president of Ross's Wild Game Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:

Month Machine-hours Overhead Costs

February 1,700 $20,500

March 2,800 22,250

April 1,000 19,950

May 2,500 21,500

June 3,500 23,950

Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.

4.

Question :

(TCO 5) Kirkland Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are:

Direct materials $0.60

Direct manufacturing labor 3.00

Variable manufacturing overhead 1.20

Fixed manufacturing overhead 1.60

Total $6.40

Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated.

a. What is the relevant per unit cost for the original part?

b. Which alternative is best for Kirkland Company? By how much?