Managerial Accounting 13th Edition

1) dadisman corporation's most recent balance sheet and income statement appear below: dividends on common stock during year 2 totaled $30 thousand. dividends on preferred stock totaled $20 thousand. the market price of common stock at the end of year 2 was $6.75 per share. the dividend yield ratio for year 2

1) wable inc. has provided the following data to be used in evaluating a proposed investment project: for tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 5 years. the company uses a discount rate of 16%. when computing the net present value of the

1) during august, sherill corporation incurred $78,000 of actual manufacturing overhead costs. during the same period, the manufacturing overhead applied to work in process was $81,000. the journal entry to record the incurrence of the actual manufacturing overhead costs would include a: a.debit to manufacturing overhead of $78,000 b.credit to work in process of

1) relative profitability is concerned with ranking business segments for the purpose of making trade-offs among the segments. Answer: true Answer: true Answer: true 2) a company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. the amount of overhead

1) if a company operates at a profit, the after-tax cost of a tax-deductible cash expense is determined by multiplying the cash expense by one minus the tax rate. Answer: true Answer: true Answer: true 2) a favorable labor efficiency variance would result in a credit balance in the labor efficiency variance account. Answer: true Answer:

1) harris company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (dlhs). the company has provided the following data: the volume variance would be: a.$2,500 f b.$1,800 f c.$1,800 u d.$1,500 f Answer: d volume variance = fixed portion of the predetermined

1) ebner corporation's balance sheet and income statement appear below: cash dividends were $37. the company sold equipment for $18 that was originally purchased for $10 and that had accumulated depreciation of $9. the net cash provided by (used by) investing activities for the year was: a.$126 b.$18 c.($144) d.($126) Answer: d $18 (sale of equipment)

1) guasson corporation uses the weighted-average method in its process costing system. this month, the beginning inventory in the first processing department consisted of 500 units. the costs and percentage completion of these units in beginning inventory were: a total of 6,400 units were started and 5,800 units were transferred to the

1) jam company uses the weighted-average method in its process costing system. operating data for the painting department for the month of april appear below: what were the equivalent units for conversion costs in the painting department for april? a.78,680 b.77,500 c.72,300 d.81,280 Answer: d Answer: d Answer: d 2) loraine company applies manufacturing overhead to jobs using

1) if the finished goods inventory increases between the beginning and the end of a period, then the cost of goods manufactured for the period is larger than the cost of goods sold. Answer: true Answer: true Answer: true 2) the cost of shipping parts from a supplier is considered a product cost. Answer: true Answer:

1) a company has provided the following data: if the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net operating income will: a.increase by $61,000 b.increase by $20,000 c.increase by $3,500 d.increase by $11,000 Answer: d Answer: d Answer: d 2)

1) geneva steel corporation produces large sheets of heavy gauge steel. the company showed the following amounts relating to its production for the year just completed: the balance of the finished goods inventory at the end of the year was: a.$95,000 b.$50,000 c.$193,000 d.$45,000 Answer: b cost of goods available for sale - cost of goods

1) genito corporation's static planning budget for october appears below. the company bases its budgets on machine-hours. in october, the actual number of machine-hours was 8,800, the actual supplies cost was $69,450, the actual power cost was $34,190, the actual salaries cost was $86,490, and the actual equipment depreciation was $37,600. the

1) in activity-based costing, organization-sustaining costs should not be included in product costs for internal management reports that are used for decision-making. however, companies frequently include organization-sustaining costs in product costs to satisfy external reporting requirements. Answer: true Answer: true Answer: true 2) if the standard hours allowed for the actual output of the period

1) data concerning plaxco corporation's single product appear below: assume the company's monthly target profit is $12,000. the dollar sales to attain that target profit is closest to: a.$941,500 b.$754,166 c.$451,920 d.$869,077 Answer: d contribution margin per unit = $180.00 - $86.40 = $93.60 contribution margin ratio = $93.60 $180.00 = 52% dollar sales to attain

1) if improvement in a performance measure on a balanced scorecard should lead to improvement in another performance measure, but does not, then management should reexamine its strategy. Answer: true Answer: true Answer: true 2) if the expected level of activity is appreciably above or below the company's present capacity, it may be desirable

1) which of the following accounts would be included in the calculation of the acid-test ratio? a.choice a b.choice b c.choice c d.choice d Answer: d Answer: d Answer: d 2) under a standard cost system, the materials price variances are usually the responsibility of the: a.production manager b.sales manager c.purchasing manager d.engineering manager Answer: c Answer: c Answer: c 3) marple company's budgeted production in

1) the consumer products division of garafalo corporation had average operating assets of $300,000 and net operating income of $46,900 in march. the minimum required rate of return for performance evaluation purposes is 16%. what was the consumer products division's residual income in march? a.$7,504 b.$1,100 c.-$7,504 d.-$1,100 Answer: d residual income = net operating income

1) a company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. a fixed manufacturing overhead volume variance will not necessarily occur in a month in which actual direct labor-hours differ from standard hours allowed. Answer: true Answer:

1) castil corporation makes and sells a product called a miniwarp. one miniwarp requires 2.5 kilograms of the raw material jurislon. budgeted production of miniwarps for the next five months is as follows: the company wants to maintain monthly ending inventories of jurislon equal to 20% of the following month's production

1) drabant kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. during february, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 2,040 tenant-days. the kennel has provided the following data concerning the

1) creelman company makes four products in a single facility. data concerning these products appear below: the milling machines are potentially the constraint in the production facility. a total of 13,000 minutes are available per month on these machines. which product makes the least profitable use of the milling machines? a.product a b.product b c.product

1) bosril corporation uses the weighted-average method in its process costing system. this month, the beginning inventory in the first processing department consisted of 400 units. the costs and percentage completion of these units in beginning inventory were: a total of 5,600 units were started and 4,900 units were transferred to

1) during the most recent month at hybarger corporation, queue time was 3.0 days, inspection time was 0.8 day, process time was 2.8 days, wait time was 11.8 days, and move time was 0.6 day. required: a. compute the throughput time. b. compute the manufacturing cycle efficiency (mce). c. what percentage of the production

1) excerpts from shelton corporation's most recent balance sheet appear below: sales on account in year 2 amounted to $1,320 and the cost of goods sold was $890. the current ratio at the end of year 2 is closest to: a.0.35 b.1.21 c.1.13 d.0.39 Answer: b current ratio = current assets current liabilities = $400 $330 =

1) how many units were started into production during the month? a.68,000 units b.84,000 units c.72,000 units d.56,000 units Answer: c Answer: c Answer: c 2) electrical costs at one of gotch corporation's factories are listed below: management believes that electrical cost is a mixed cost that depends on machine-hours. using the high-low method to estimate

1) lisby, inc., allocates service department costs to operating departments using the step-down method. the company has two service departments, administration and physical plant, and two operating departments, assembly and testing. data concerning those departments follow: administration department costs are allocated first on the basis of employee time and physical plant

1) hackney company, which has only one product, has provided the following data concerning its most recent month of operations: what is the net operating income for the month under variable costing? a.$4,700 b.$(5,300) c.$1,500 d.$3,200 Answer: d Answer: d Answer: d 2) bessey hospital bases its budgets on patient-visits. the hospital's static planning budget for

1) eyring industries has a truck purchased seven years ago at a cost of $6,000. at the time of purchase, the ultimate salvage value was estimated at $500, but salvage value was ignored in depreciation deductions. the truck is now fully depreciated. assuming a tax rate of 40%, if the

1) rank the following methods of assigning overhead costs from least accurate to most accurate. a.departmental rates, plantwide rate, activity-based costing b.plantwide rate, departmental rates, activity-based costing c.plantwide rate, activity-based costing, departmental rates d.activity-based costing, departmental rates, plantwide rate e.activity-based costing, plantwide rate, departmental rates Answer: b Answer: b Answer: b 2) langin corporation has provided its contribution format

1) monsky corporation produces and sells a single product whose contribution margin ratio is 60%. the company's monthly fixed expense is $420,000 and the company's monthly target profit is $13,000. the dollar sales to attain that target profit is closest to: a.$252,000 b.$259,800 c.$721,667 d.$700,000 Answer: c sales needed to achieve target profit = ($420,000

1) the management of crapser corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. the company's controller has provided an example to illustrate how this new system would work. in this example, the allocation base is machine-hours and the estimated amount of the

1) in companies that have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate. Answer: false Answer: false Answer: false 2) a newly formed company with enormous

1) division x makes a part that it sells to customers outside of the company. data concerning this part appear below: selling price to outside customers $50 variable cost per unit $30 total fixed costs $400,000 capacity in units 25,000 division y of the same company would like to use the part manufactured by division

1) merone company allocates materials handling cost to the company's two products using the below data: the total materials handling cost for the year is expected to be $218,790. if the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost would be

1) lavell corporation reported the following data for the month of february: the cost of goods sold for february was: a.$225,000 b.$134,000 c.$184,000 d.$127,000 Answer: b Answer: b Answer: b 2) in capital budgeting, what will be the effect on the following if there is an increase in the discount rate? a.choice a b.choice b c.choice c d.choice d e.choice e Answer: c Answer:

1) pardise company plans the following beginning and ending inventory levels (in units) for july: two units of raw material are needed to produce each unit of finished product. if the company plans to sell 640,000 units during the year, the number of units it would have to manufacture during the year

1) suppose fewer units are sold in year 2 than in year 1. if production exceeds sales in year 2, net operating income under absorption costing could be higher in year 2 than in year 1. Answer: true Answer: true Answer: true 2) the statement of ethical professional practice promulgated by the institute of

1) the following labor standards have been established for a particular product: the following data pertain to operations concerning the product for the last month: what is the labor rate variance for the month? a.$2,955 f b.$4,935 f c.$2,955 u d.$1,890 u Answer: d ar = $103,635 6,300 = $16.45 direct labor rate variance = ah (ar

1) changing a cost accounting system is likely to meet with little resistance in an organization since it is a technical matter of little interest to individuals outside of the accounting department. Answer: false Answer: false Answer: false 2) if a company is considering accepting a number of jobs, but there is insufficient production

1) which of the following accounts is debited when indirect labor is recorded? a.work in process b.salaries and wages expense c.salaries and wages payable d.manufacturing overhead Answer: d Answer: d Answer: d 2) during august, sherill corporation incurred $78,000 of actual manufacturing overhead costs. during the same period, the manufacturing overhead applied to work in process was $81,000. the cost

1) the average sale period for year 2 is closest to: a.35.1 days b.237.9 days c.58.0 days d.53.9 days Answer: c average sale period = 365 days inventory turnover = 365 days 6.29* = 58.0 days *inventory turnover = cost of goods sold average inventory = $880 $140** = 6.29 **($150 + $130) 2 =

1) gowin inc. has provided the following data for the month of september. there were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. manufacturing overhead for the month was overapplied by $13,000. the company allocates any underapplied or overapplied overhead

1) whoever is responsible for the control of the denominator activity in the predetermined overhead rate should also be responsible for the variable overhead efficiency variance. Answer: true Answer: true Answer: true 2) the activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the

1) an action analysis report reconciles activity-based costing product costs with traditional product costs based on direct labor. Answer: false Answer: false Answer: false 2) under variable costing, product cost contains some fixed manufacturing overhead cost. Answer: false Answer: false Answer: false 3) the payback method of making capital budgeting decisions gives full consideration to the time value of

1) schrick inc. manufactures a variety of products. variable costing net operating income was $86,800 last year and ending inventory increased by 1,900 units. fixed manufacturing overhead cost was $6 per unit. what was the absorption costing net operating income last year? a.$86,800 b.$75,400 c.$98,200 d.$11,400 Answer: c fixed manufacturing overhead deferred = $6 x

1) sabat corporation has two productss94 and t88that use the same constrained resourcea critical raw material. data concerning those products follow: the total amount of the constrained resource available is 10,400 grams. required: a. which product is most profitable, given the company's constraint? b. how much of each product should be produced? c. what is

1) bakken corporation has provided the following production and average cost data for two levels of monthly production volume. the company produces a single product. the best estimate of the total variable manufacturing cost per unit is: a.$16.50 b.$90.40 c.$45.50 d.$106.90 Answer: ddirect materials and direct labor are entirely variable since cost per unit does

1) (ignore income taxes in this problem) the management of nagata corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. the aircraft would have a useful life of 6 years. the company uses a discount rate of 13% in its capital

1) dantuono corporation manufactures and sells a single product. the company uses units as the measure of activity in its budgets and performance reports. during november, the company budgeted for 7,700 units, but its actual level of activity was 7,720 units. the company has provided the following data concerning the

1) the working capital at the end of year 2 is: a.$1,020 thousand b.$280 thousand c.$650 thousand d.$990 thousand Answer: b working capital = current assets - current liabilities = $650 - $370 = $280 Answer: b working capital = current assets - current liabilities = $650 - $370 = $280 Answer: b working capital = current

1) (ignore income taxes in this problem.) stern corporation is considering the purchase of a machine that would cost $270,000 and would last for 9 years. at the end of 9 years, the machine would have a salvage value of $38,000. by reducing labor and other operating costs, the machine

1) the following data pertain to activity and costs for two recent months: assuming that these activity levels are within the relevant range, the mixed costs for november were: a.$40,000 b.$35,000 c.$25,000 d.$20,000 Answer: c october variable cost per unit = $10,000 5,000 units = $2.00 per unitnovember variable costs = $2.00 10,000 units = $20,000fixed

1) the following data pertain to harriman company's operations during july: the beginning work in process inventory was: a.$10,000 b.$14,000 c.$1,000 d.$4,000 Answer: a* calculate this item by working backwards as shown:beginning work in process inventory + $40,000 + $39,000 + $20,000 - $4,000 = $105,000beginning work in process inventory=$105,000 - $40,000 - $39,000 -

1) ermoin corporation uses the weighted-average method in its process costing system. this month, the beginning inventory in the first processing department consisted of 600 units. the costs and percentage completion of these units in beginning inventory were: a total of 5,700 units were started and 4,700 units were transferred to

1) hutton corporation keeps careful track of the time required to fill orders. data concerning a particular order appear below: the throughput time was: a.25 hours b.13.5 hours c.20.9 hours d.4.1 hours Answer: b throughput time = process time + inspection time + move time + queue time = 0.7 days +0.1 days + 3.3 days

1) enterprise risk management involves replacing risky investments with investments in low-risk government securities. Answer: false Answer: false Answer: false 2) under the direct method of determining the net cash provided by operating activities on the statement of cash flows, an increase in account receivable would be deducted from sales revenue to convert revenue to

1) kleppe corporation has provided the following data from its activity-based costing accounting system: the "other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products. how much indirect factory wages and factory equipment depreciation cost would not be assigned to products using the

1) eccles corporation uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. during the year the company's finished goods inventory account was debited for $384,000 and credited for $325,900. the ending balance in the finished goods inventory account was $72,100. at the end of the

1) (ignore income taxes in this problem.) how is depreciation handled by the following capital budgeting techniques? a.choice a b.choice b c.choice c d.choice d Answer: a Answer: a Answer: a 2) hurst co. manufacturers and sells a single product. price and cost data regarding this product are as follows: in the current year, the company sold 43,000 units.

1) ermoin corporation uses the weighted-average method in its process costing system. this month, the beginning inventory in the first processing department consisted of 600 units. the costs and percentage completion of these units in beginning inventory were: a total of 5,700 units were started and 4,700 units were transferred to

1) _________________ is a method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors. a.quick and dirty method b.scattergraph method c.high-low method d.least-square regression method Answer: d Answer: d Answer: d 2) a company needs an increase in working capital of $30,000 in

1) franca corporation has two service departments, administrative and facilities, and two operating departments, assembly and customer feedbacks. the company uses the direct method to allocate service department costs to operating departments. administrative costs are allocated on the basis of employee hours and facilities costs are allocated on the basis of space

1) the demand for products that are sold in discount stores is generally more elastic than the demand for products sold in upscale boutiques. Answer: true Answer: true Answer: true 2) if all four of argo corporation's overhead variances are favorable, argo's overhead will be overapplied. Answer: true Answer: true Answer: true 3) if a company is operating at

1) prater company has provided the following data: the best estimate of the company's variable selling and administrative expense per unit is: a.$0.24 per unit b.$4.17 per unit c.$0.91 per unit d.$0.96 per unit Answer: a variable component of selling and administrative expenses: variable cost = change in costs change in units = ($272,000 - $260,000)

1) the mohawk-hudson company is an electric utility which has two service departments, accounting and maintenance. it has two operating departments, generation and transmission. the company does not distinguish between fixed and variable service department costs. maintenance department costs are allocated on the basis of maintenance hours. accounting department costs

1) kuczenski corporation's cost formula for its manufacturing overhead is $45,700 per month plus $53 per machine-hour. for the month of march, the company planned for activity of 6,200 machine-hours, but the actual level of activity was 6,150 machine-hours. the actual manufacturing overhead for the month was $373,630. the activity variance

1) (ignore income taxes in this problem.) a company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year. the payback period for this machine in years is closest to: a.0.27 years b.10.7 years c.3.75 years d.40

1) excerpts from stys corporation's most recent balance sheet and income statement appear below: dividends on common stock during year 2 totaled $50 thousand. dividends on preferred stock totaled $10 thousand. the market price of common stock at the end of year 2 was $8.20 per share. the price-earnings ratio for year

1) (ignore income taxes in this problem.) the connelly company has funds available to invest in the following project: the working capital needed now would be released at the end of the seven years for investment elsewhere. consider only the cash flows for the third year. the present value of the net

1) burgett corporation's balance sheet and income statement appear below: cash dividends were $41. the company sold equipment for $15 that was originally purchased for $4 and that had accumulated depreciation of $4. the net cash provided by (used by) investing activities for the year was: a.($132) b.($117) c.$117 d.$15 Answer: b -$132 (purchase of plant and

1) pardee company plans to sell 12,000 units during the month of august. if the company has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at the end of the month, how many units must be produced during the month? a.11,500 b.12,500 c.12,000 d.14,000 Answer:

1) data concerning plaxco corporation's single product appear below: assume the company's monthly target profit is $11,000. the unit sales to attain that target profit is closest to: a.4,818 b.5,219 c.4,181 d.2,505 Answer: a contribution margin per unit = $180.00 - $86.40 = $93.60 unit sales to achieve target profit = (fixed expenses + target profit)

1) (ignore income taxes in this problem.) jones and company has just purchased a new piece of equipment, the cost characteristics of which are given below: the company uses a required rate of return of 10% and depreciates equipment using the straight-line method. the payback period for the investment is: a.5 years b.15 years c.2

1) gargymal company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations. using the high-low method, the estimated monthly fixed component of the electrical cost is: a.$260 b.$235 c.$280 d.$800 Answer: c variable cost = change in cost change

1) dufour corporation uses the weighted-average method in its process costing system. this month, the beginning inventory in the first processing department consisted of 600 units. the costs and percentage completion of these units in beginning inventory were: a total of 5,700 units were started and 4,900 units were transferred to

1) hurst co. manufacturers and sells a single product. price and cost data regarding this product are as follows: how many units need to be sold to earn an annual net operating income equal to 10% of sales? a.44,000 units b.53,200 units c.54,500 units d.47,500 units Answer: b variable expenses per unit = $20 + $6 =

1) bunyard corporation has two operating divisions-an atlantic division and a pacific division. the company's logistics department services both divisions. the variable costs of the logistics department are budgeted at $45 per shipment. the logistics department's fixed costs are budgeted at $212,400 for the year. the fixed costs of the

1) mccaughey corporation's most recent balance sheet and income statement appear below: the accounts receivable turnover for year 2 is closest to: a.1.15 b.9.62 c.0.87 d.8.93 Answer: Answer: Answer: d accounts receivable turnover = sales on account average accounts receivable = $1,250$140* = 8.93 *($150 + 130) 2 = $280 2 = $140 d accounts receivable turnover

1) bosril corporation uses the weighted-average method in its process costing system. this month, the beginning inventory in the first processing department consisted of 400 units. the costs and percentage completion of these units in beginning inventory were: a total of 5,600 units were started and 4,900 units were transferred to

1) in the manufacturing overhead budget, the non-cash charges (such as depreciation) are added to the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead. Answer: false Answer: false Answer: false 2) the three cost categories appearing on a job cost sheet are: selling expense, manufacturing expense, and administrative expense. Answer:

1) the management of cerruto corporation has provided the following data concerning its two products: the constrained resource is a particular machine that is available for 9,600 minutes each month. the company is considering launching a new product that would have a variable cost of $117.00 per unit. it would require 6

1) the best estimate of the total contribution margin when 4,300 units are sold is: a.$134,590 b.$43,430 c.$64,070 d.$38,270 Answer: cvariable component of cost of goods sold:variable cost = change in costs change in unitsvariable cost = ($422,500 - $338,000) (5,000 - 4,000)variable cost = $84.50 per unitfixed cost:high units: $422,500 - $84.50 x

1) dagnon corporation uses direct labor-hours in its predetermined overhead rate. at the beginning of the year, the total estimated manufacturing overhead was $299,130. at the end of the year, actual direct labor-hours for the year were 17,400 hours, manufacturing overhead for the year was overapplied by $13,850, and the

1) a manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: what is the variable costing unit product cost for the month? a.$97 b.$90 c.$68 d.$75 Answer: c unit product cost = direct materials + direct labor + variable manufacturing overhead = $20 + $41 +

1) the management of smoots corporation would like for you to analyze their repair costs, which are listed below: management believes that repair cost is a mixed cost that depends on the number of machine-hours. using the least-squares regression method, the estimates of the variable and fixed components of repair cost

1) the management of cius corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. the company's controller has provided an example to illustrate how this new system would work. in this

1) leonhardt corporation's net income last year was $3,800,000. the dividend on common stock was $2.00 per share and the dividend on preferred stock was $1.80 per share. the market price of common stock at the end of the year was $53.40 per share. throughout the year, 500,000 shares of

1) the same constrained resource is used by four different products at porraz corporation. data concerning those products appear below: the company does not have enough of the constrained resource to satisfy for demand of all four products. if salespersons are paid commissions that are a set percentage of sales, which product

1) hilty corporation produces and sells two products. in the most recent month, product u77d had sales of $45,000 and variable expenses of $15,750. product d86d had sales of $49,000 and variable expenses of $22,790. and the fixed expenses of the entire company were $46,170. the break-even point for the

1) alake company is a manufacturing firm that uses job-order costing. at the beginning of the year, the company's inventory balances were as follows: the company applies overhead to jobs using a predetermined overhead rate based on machine-hours. at the beginning of the year, the company estimated that it would work

1) a company that makes horsehair cowboy belts cannot meet the demand for belts due to a limited supply of artisans who know how to make the belts. to determine which models of the cowboy belts should be emphasized, the company should rank the models by dividing the selling price of

1) a new product, an automated crepe maker, is being introduced at boorman corporation. at a selling price of $72 per unit, management projects sales of 20,000 units. launching the crepe maker as a new product would require an investment of $700,000. the desired return on investment is 14%. the

1) (ignore income taxes in this problem.) boston company is contemplating the purchase of a new machine on which the following information has been gathered: the company's discount rate is 16%, and the machine will be depreciated using the straight-line method. given these data, the machine has a net present value

1) spraque air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. the cost formula for plane operating costs is $40,520 per month plus $2,733 per flight plus $11 per passenger. the company expected its activity in june to be 71 flights and

1) in preference decision situations, a project with a high net present value will always be preferable to a project with a lower net present value. Answer: false Answer: false Answer: false 2) when long-term investment funds are the constraint and the company is choosing from among potential long-term projects, the profitability index should

1) weisgarber clinic uses client-visits as its measure of activity. during august, the clinic budgeted for 3,900 client-visits, but its actual level of activity was 3,850 client-visits. the clinic has provided the following data concerning the formulas to be used in its budgeting for august: the personnel expenses in the planning budget

1) your boss would like you to estimate the fixed and variable components of a particular cost. actual data for this cost over four recent periods appear below. using the least-squares regression method, what is the cost formula for this cost? a.y = $24.51 + $1.08x b.y = $10.33 + $1.92x c.y = $0.00

1) the standards for product j35 call for 1.0 pounds of a raw material that costs $15.60 per pound. last month, 5,700 pounds of the raw material were purchased for $90,345. the actual output of the month was 5,280 units of product j35. a total of 5,200 pounds of the raw

1) the tobler company has budgeted production for next year as follows: four pounds of raw materials are required for each unit produced. raw materials on hand at the start of the year total 4,000 pounds. the raw materials inventory at the end of each quarter should equal 10% of the next quarter's

1) tenicheff corporation uses the fifo method in its process costing system. operating data for the curing department for the month of march appear below: according to the company's records, the conversion cost in beginning work in process inventory was $10,250 at the beginning of march. the cost per equivalent unit

1) division a makes a part with the following characteristics: division b, another division of the same company, would like to purchase 5,000 units of the part each period from division a. division b is now purchasing these parts from an outside supplier at a price of $24 each. suppose that division

1) when reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs released from inventory under absorption costing should be deducted from variable costing net operating income to arrive at the absorption costing net operating income. Answer: true Answer: true Answer: true 2) net operating income is affected by changes in production

1) mahan, inc., uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. based on budgeted sales of 60,000 units next year, the unit product cost of a particular product is $56.20. the company's selling and administrative expenses for this product are

1) from a standpoint of cost control, the most effective time to recognize materials price variances is when the materials are placed into production. Answer: false Answer: false Answer: false 2) a production budget is to a manufacturing firm as a merchandise purchases budget is to a merchandising firm. Answer: true Answer: true Answer: true 3) when combining activities

1) negative free cash flow invariably signals poor performance. Answer: false Answer: false Answer: false 2) quantity standards indicate how much of an input should be used for manufacturing a unit of product or in providing a unit of service. Answer: true Answer: true Answer: true 3) an investment project with a project profitability index of less than zero

1) brummitt corporation is working on its direct labor budget for the next two months. each unit of output requires 0.05 direct labor-hours. the direct labor rate is $7.50 per direct labor-hour. the production budget calls for producing 9,100 units in may and 8,800 units in june. if the direct

1) when a dispute arises over a transfer price, top managers should intervene to keep divisional managers from making a costly mistake, even though the divisions are evaluated as profit centers. Answer: false Answer: false Answer: false 2) the denominator activity represents the actual level of activity recorded for a period. Answer: false Answer: false Answer: false 3)

1) the predetermined overhead rate (variable and fixed) is $7.50 per machine-hour and the denominator activity level is 135,000 machine-hours. if the variable portion of the predetermined overhead rate is $3.00 per machine-hour, then the budgeted fixed factory overhead for the year is: a.$30,000 b.$607,500 c.$405,000 d.$1,012,500 Answer: b predetermined overhead rate - variable portion =

1) the dawson corporation projects the following for the upcoming year: the expected dividend per share of common stock is: a.$2.10 b.$2.70 c.$1.80 d.$3.90 Answer: a net income = ($35 - $5) x (1 - 40%) = $30 x 60% = $18 earnings per share = (net income- preferred dividends) average number of common shares outstanding)

1) cost of goods manufactured will usually include: a.only costs incurred during the current period b.only direct labor and direct materials costs c.some costs incurred during the prior period as well as costs incurred during the current period d.some period costs as well as some product costs Answer: c Answer: c Answer: c 2) weisinger corporation has provided

1) which of the following would be classified as an appraisal cost on a quality cost report? a.systems development b.plant utilities in the inspection area c.lost sales arising from a reputation for poor quality d.audits of the effectiveness of the quality system Answer: b Answer: b Answer: b 2) at a sales volume of 36,000 units, quale corporation's

1) seyal inc.'s contribution margin ratio is 55% and its fixed monthly expenses are $34,000. assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $94,000? a.$17,700 b.$60,000 c.$8,300 d.$51,700 Answer: a Answer: a Answer: a 2) a lawnmower

1) the fixed manufacturing overhead budget variance and the fixed manufacturing overhead volume variance taken together explain the difference between the actual fixed manufacturing overhead cost incurred and the fixed manufacturing overhead cost applied to production. Answer: true Answer: true Answer: true 2) the present value of a cash flow decreases as it moves

1) the alpha company produces toys for national distribution. standards for a particular toy are: materials: 12 ounces per unit at 56 per ounce. labor: 2 hours per unit at $2.75 per hour. during the month of december, the company produced 1,000 units. information for the month follows: materials: 14,000 ounces were purchased and

1) menson corporation manufactures and sells a single product. the company uses units as the measure of activity in its budgets and performance reports. during december, the company budgeted for 5,800 units, but its actual level of activity was 5,830 units. the company has provided the following data concerning the

1) buffo company fabricates metal folding chairs. data concerning the company's revenue and cost structure follow: if buffo expects to produce and sell 2,000 units next month, the total expected manufacturing cost would be: a.$34,000 b.$39,000 c.$45,500 d.$38,000 Answer: d total expected manufacturing cost = $4,000 + ($17 x 2,000 units) = $38,000 Answer: d total expected

1) the management of jahns corporation is considering introducing a new producta compact barbecue. at a selling price of $59 per unit, management projects sales of 30,000 units. launching the barbecue as a new product would require an investment of $500,000. the desired return on investment is 19%. the target

1) zents inc. produces and sells a single product. the selling price of the product is $240.00 per unit and its variable cost is $108.00 per unit. the fixed expense is $407,880 per month. the break-even in monthly dollar sales is closest to: a.$685,293 b.$741,600 c.$906,400 d.$407,880 Answer: b contribution margin per unit = $240 -

1) elgot company produces a single product. the cost of producing and selling a single unit of this product at the company's normal activity level of 30,000 units per month is as follows: the normal selling price of the product is $51.10 per unit. an order has been received from an overseas

1) grundhoefer kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. during april, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 1,990 tenant-days. the kennel has provided the following data concerning the

1) craston company's net income last year was $70,000. the company paid preferred dividends of $10,000 and its average common stockholders' equity was $480,000. the company's return on common stockholders' equity for the year was closest to: a.12.5% b.14.6% c.16.7% d.2.1% Answer: a return on common stockholders' equity = (net income - preferred dividends) (average

1) data concerning grodi corporation's single product appear below: fixed expenses are $324,000 per month. the company is currently selling 5,000 units per month. management is considering using a new component that would increase the unit variable cost by $9. since the new component would increase the features of the company's product,

1) waldvogel corporation has provided data concerning the company's manufacturing overhead account for the month of april. prior to the closing of the overapplied or underapplied balance to cost of goods sold, the total of the debits to the manufacturing overhead account was $55,000 and the total of the credits

1) the commando motorcycle company has decided to become decentralized and split its operations into two divisions, motor and assembly. both divisions will be treated as investment centers. the motor division is currently operating at its capacity of 30,000 motors per year. motor's costs at this level of production are

1) kimbeth manufacturing makes dust density sensors (dds), a safety device for the mining industry. the company uses a process costing system and has only a single processing department. the following information pertains to operations for the month of may: the beginning work in process inventory was 60% complete with respect

1) the management of haigler corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. the company's controller has provided an example to illustrate how this new system would work. in this example, the allocation base is machine-hours and the estimated amount of the

1) lauser clinic uses client-visits as its measure of activity. during july, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690 client-visits. the clinic has provided the following data concerning the formulas used in its budgeting and its actual results for july: the occupancy expenses in the

1) data concerning sotero corporation's single product appear below: the company is currently selling 5,000 units per month. fixed expenses are $319,000 per month. consider each of the following questions independently. this question is to be considered independently of all other questions relating to sotero corporation. refer to the original data when answering

1) dolney corporation has provided the following data for a recent period: the variable overhead rate variance for lubricants is closest to: a.$3,820 u b.$600 f c.$3,820 f d.$4,420 f Answer: c ar = $51,680 27,750 = $1.86 (rounded) variable overhead rate variance = ah (ar - sr) = 27,750 ($1.86 - $2.00) = $3,820 f

1) kets corporation uses the fifo method in its process costing system. operating data for the enameling department for the month of may appear below: what were the equivalent units for conversion costs in the enameling department for may? a.83,190 b.80,600 c.83,800 d.84,400 Answer: a Answer: a Answer: a 2) deleston boat wash's cost formula for its

1) data concerning sotero corporation's single product appear below: the company is currently selling 5,000 units per month. fixed expenses are $319,000 per month. consider each of the following questions independently. this question is to be considered independently of all other questions relating to sotero corporation. refer to the original data when answering

1) the costs assigned to units in inventory are typically lower under absorption costing than under variable costing. Answer: false Answer: false Answer: false 2) when using internal rate of return to evaluate investment projects, if the internal rate of return is less than the required rate of return, the project would be accepted. Answer:

1) an unfavorable activity variance for a cost indicates that spending was higher than it should have been for the actual level of activity for the period. Answer: false Answer: false Answer: false 2) the emphasis in the balanced scorecard is on improvement rather than meeting a preset standard. Answer: true Answer: true Answer: true 3) ideal standards

1) vanikoro corporation currently has two divisions which had the following operating results for last year: since the rubber division sustained a loss, the president of vanikoro is considering the elimination of this division. all of the fixed costs for the division could be eliminated if the division was dropped. if

1) ben company produces a single product. last year, the company's net operating income under absorption costing was $4,400 lower than under variable costing. the company sold 8,000 units during the year, and its variable costs were $8 per unit, of which $3 was variable selling expense. fixed manufacturing overhead

1) harwichport company has a current ratio of 3.5 and an acid-test ratio of 2.8. current assets equal $175,000 of which $5,000 consists of prepaid expenses. the remainder of current assets consists of cash, accounts receivable, marketable securities, and inventory. harwichport company's inventory must be: a.$30,000 b.$40,000 c.$50,000 d.$35,000 Answer: a current ratio = current

1) eagen corporation manufactures a variety of products. the following data pertain to the company's operations over the last two years: required: a. determine the absorption costing net operating income for last year. show your work! b. determine the absorption costing net operating income for this year. show your work! Answer: a. and b.

1) demand for a product is said to be elastic if a change in price has: a.no effect on the volume of units sold b.substantial effect on the volume of units sold c.little effect on the volume of units sold d.little effect on the volume of units produced Answer: b Answer: b Answer: b 2) lakeside nursing home

1) the lean thinking model focuses on reducing defects to as close to zero as possible. Answer: false Answer: false Answer: false 2) corporate social responsibility refers to the moral obligation of all corporations to make substantial monetary contributions to charitable causes. Answer: false Answer: false Answer: false 3) all cost variances should be considered exceptions that require

1) tabcomp inc. is a retail distributor for mzb-33 computer hardware and related software. tabcomp prepares annual sales forecasts of which the first six months of the coming year are presented below. cash sales account for 25% of tabcomp's total sales, 30% of the total sales are paid by bank credit

1) parlee company's sales are 30% in cash and 70% on credit. sixty % of the credit sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. the remainder are uncollectible. the following are budgeted sales data: total cash receipts

1) an increase in the number of units sold will decrease the break-even point. Answer: false Answer: false Answer: false 2) the profit in cost-volume-profit equations is the same as the net operating income on a contribution income statement. Answer: true Answer: true Answer: true 3) if a product is price inelastic, then a small change in selling

1) the management of wymer corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. the company's controller has provided an example to illustrate how this new system would work. in this example, the allocation base is machine-hours and the estimated amount of the

1) kerson corporation's most recent balance sheet and income statement appear below: required: compute the following for year 2: a. times interest earned. b. debt-to-equity ratio. Answer: Answer: Answer: a. times interest earned = net operating income interest expense = $112 $33 = 3.39b. debt-to-equity ratio = liabilities stockholders' equity = $510 $710 = 0.72 a.

1) witherington corporation manufactures and sells a single product. the company uses units as the measure of activity in its budgets and performance reports. during june, the company budgeted for 7,800 units, but its actual level of activity was 7,850 units. the company has provided the following data concerning the

1) the management of fanton corporation is considering introducing a new producta compact lawn blower. at a selling price of $38 per unit, management projects sales of 60,000 units. the lawn blower would require an investment of $500,000. the desired return on investment is 18%. the desired profit according to the

1) trend percentages state several years' financial data in terms of a base year. for example, sales for every year would be stated as a percentage of the sales in the base year. Answer: true Answer: true Answer: true 2) the production manager is usually held responsible for the labor efficiency variance. Answer: true Answer: true Answer:

1) smalling inc. has provided the following data for the month of november: the adjusted cost of goods sold that appears on the income statement for november is: a.$237,000 b.$225,000 c.$214,000 d.$213,000 Answer: Answer: Answer: c c c 2) erdmann corporation has provided its contribution format income statement for july. the company produces and sells a

1) differential costs can be either fixed or variable. Answer: true Answer: true Answer: true 2) activity-based costing uses a number of activity cost pools, each of which is allocated to products on the basis of direct labor-hours. Answer: false Answer: false Answer: false 3) the issuance of a stock dividend will appear in the financing activities section of

1) edmondson inc. produces and sells a single product. the selling price of the product is $200.00 per unit and its variable cost is $50.00 per unit. the fixed expense is $205,500 per month. the break-even in monthly unit sales is closest to: a.4,110 b.2,169 c.1,028 d.1,370 Answer: d contribution margin per unit = $200.00 - $50.00

1) the accounts receivable balance that would appear in the march 31 budgeted balance sheet would be: a.$15,000 b.$16,000 c.$8,800 d.$12,400 Answer: c Answer: c Answer: c 2) lavell corporation reported the following data for the month of february: the total manufacturing cost for february was: a.$174,000 b.$171,000 c.$70,000 d.$108,000 Answer: b Answer: b Answer: b 3) littau inc. has provided

1) marchi family inn is a bed and breakfast establishment in a converted 100-year-old mansion. the inn's guests appreciate its gourmet breakfasts and individually decorated rooms. the inn's overhead budget for the most recent month appears below: the inn's variable overhead costs are driven by the number of guests. what would

1) the controller of hallowell company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: the total materials handling cost for the year is expected to be $18,257.40. if the materials handling cost is allocated on the basis

1) the manufacturing overhead budget at waycaster corporation is based on budgeted direct labor-hours. the direct labor budget indicates that 6,000 direct labor-hours will be required in february. the variable overhead rate is $3.40 per direct labor-hour. the company's budgeted fixed manufacturing overhead is $81,600 per month, which includes depreciation

1) thiel inc. is working on its cash budget for october. the budgeted beginning cash balance is $35,000. budgeted cash receipts total $166,000 and budgeted cash disbursements total $162,000. the desired ending cash balance is $50,000. the excess (deficiency) of cash available over disbursements for october will be: a.$31,000 b.$39,000 c.$4,000 d.$201,000 Answer: b excess

1) hostetter corporation would like to use target costing for a new product it is considering introducing. at a selling price of $30 per unit, management projects sales of 30,000 units. the new product would require an investment of $200,000. the desired return on investment is 13%. the target cost per

1) economists correctly point out that many costs that the accountant classifies as variable are actually curvilinear. Answer: true Answer: true Answer: true 2) screening decisions follow preference decisions and seek to rank investment proposals in order of their desirability. Answer: false Answer: false Answer: false 3) when a company prepares its statement of cash flows under the

1) grundmann inc. reports that at an activity level of 6,500 machine-hours in a month, its total variable inspection cost is $487,110 and its total fixed inspection cost is $326,040. what would be the average fixed inspection cost per unit at an activity level of 6,600 units in a month? assume

1) (ignore income taxes in this problem) the management of malit corporation is investigating an investment in equipment that would have a useful life of 9 years. the company uses a discount rate of 17% in its capital budgeting. the net present value of the investment, excluding the annual cash