Assume that a local bank sells two services, checking accounts and atm card services. the bank’s only two customers are mr. donethat and ms. beenthere. mr. donethat is willing to pay $8 a month for the bank to service his checking account and $2 a month for unlimited use of his atm card. ms. beenthere is willing to pay only $5 for a checking account, but is willing to pay $9 for unlimited use of her atm card. assume that the bank can provide each of these services at zero marginal cost. refer to scenario 17-5. if the bank is unable to use tying, what is the profit-maximizing price to charge for a checking account

Distinguish direct costs from indirect costs. a. direct costs are related to the particular cost object and can be traced to that cost object in a cost-effective way while indirect costs are related to the particular cost object but cannot be traced to that cost object in a cost-effective way. b. direct costs include the acquisition costs of all materials that eventually become part of the cost object and can be traced to the cost object in an economically feasible way while indirect costs include compensation of all manufacturing labor that can be traced to the cost object in an economically feasible way. c. direct costs are historical or past costs incurred while indirect costs are predicted or forecasted costs. d. direct costs are those that change in total in proportion to changes in the related level of total activity or volume while indirect costs are those that remain unchanged in total for a given time period, despite wide changes in the related level of total activity or volume.

Wallis company manufactures only one product and uses a standard cost system. the company uses a predetermined plantwide overhead rate that relies on direct labor-hours as the allocation base. all of the company's manufacturing overhead costs are fixed—it does not incur any variable manufacturing overhead costs. the predetermined overhead rate is based on a cost formula that estimated $2,886,000 of fixed manufacturing overhead for an estimated allocation base of 288,600 direct labor-hours. wallis does not maintain any beginning or ending work in process inventory.

Which of the following costs are not considered in a differential analysis for a make-or-buy decision? fixed overhead that will continue if the item is purchased.direct materials and direct labor if the item is purchased.variable overhead if the item is manufactured internally.indirect materials and indirect labor if the item is manufactured internally.