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The Chase Company has a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours (DLHs). The company recorded the
following activity and cost data relating to manufacturing overhead for October:
The amount of fixed manufacturing overhead cost applied to work in process during
September was:
A. $47,832
B. $26,520
C. $42,432
D. $43,605
Answer:
A furniture manufacturer has a standard costing system based on standard direct
labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget
for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What was the fixed manufacturing overhead volume variance for the period to the
nearest dollar?
A. $2,486 U
B. $1,511 U
C. $975 U
D. $2,653 U
Answer:
Reference: 8-25
Lotson Corporation bases its budgets on machine-hours. The companys static planning
budget for May appears below:
Actual results for the month were:
The spending variance for equipment depreciation for the month should be:
A) $320 F
B) $3,310 U
C) $320 U
D) $3,310 F
Answer:
Yista Corporation uses a predetermined overhead rate based on direct labor-hours to
apply manufacturing overhead to jobs. The company estimated manufacturing overhead
at $510,000 for the year and direct labor-hours at 100,000 hours. Actual manufacturing
overhead costs incurred during the year totaled $540,000. Actual direct labor-hours
were 105,000. What was the overapplied or underapplied overhead for the year?
A. $30,000 overapplied
B. $30,000 underapplied
C. $4,500 overapplied
D. $4,500 underapplied
Answer:
Excerpts from Zorra Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850.
The inventory turnover for Year 2 is closest to:
A. 4.05
B. 4.36
C. 1.17
D. 0.86
Answer:
Borden Enterprises uses standard costing. For the month of April, the company reported
the following data:
- Standard direct labor rate: $10 per hour
- Standard hours allowed for actual production: 8,000 hours
- Actual direct labor rate: $9.50 per hour
- Labor efficiency variance: $4,800 Favorable
The labor rate variance for April is:
A) $3,760 U
B) $3,760 F
C) $2,850 F
D) $2,850 U
Answer:
The following is Allison Corporation's contribution format income statement for last
month:
The company has no beginning or ending inventories. The company produced and sold
10,000 units last month.
What is the company's degree of operating leverage?
A. 0.2
B. 8.0
C. 1.7
D. 5.0
Answer:
Gambarini Corporation is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The company
sells the product for $197.80 per unit.
The best estimate of the total monthly fixed cost is:
A. $541,800
B. $1,192,100
C. $1,099,200
D. $1,145,650
Answer:
Franklin Glass Works uses a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours. Each unit requires two standard
hours of direct labor for completion. The denominator activity for the year was based
on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for
the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour.
The actual data pertaining to the manufacturing overhead for the year are presented
below:
The fixed manufacturing overhead applied to Franklin's production for the year is:
A. $484,200
B. $575,000
C. $594,000
D. $600,000
Answer:
Haras Corporation is a wholesaler that sells a single product. Management has provided
the following cost data for two levels of monthly sales volume. The company sells the
product for $141.30 per unit.
The best estimate of the total variable cost per unit is:
A. $123.40
B. $79.60
C. $57.90
D. $130.70
Answer:
Mancuso Corporation has provided its contribution format income statement for
January. The company produces and sells a single product.
If the company sells 3,100 units, its total contribution margin should be closest to:
A. $27,045
B. $181,000
C. $162,400
D. $173,600
Answer:
Reference: 8-30
Snuggs Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in October.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The materials price variance for October is:
A) $620 F
B) $616 F
C) $616 U
D) $620 U
Answer:
The following is Allison Corporation's contribution format income statement for last
month:
The company has no beginning or ending inventories. The company produced and sold
10,000 units last month.
If sales increase by 200 units, by how much should net operating income increase?
A. $16,000
B. $5,000
C. $2,000
D. $10,000
Answer:
A company that had a $500 decrease in accounts receivable during a period would do
which of the following on its statement of cash flows prepared using the indirect
method?
A. Add the $500 to net income in order to arrive at net cash provided by operating
activities.
B. Subtract the $500 from net income in order to arrive at net cash provided by
operating activities.
C. Add the $500 to the net cash provided by investing activities.
D. Add the $500 to the net cash provided by financing activities.
Answer:
Excerpts from Zorra Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850.
The accounts receivable turnover for Year 2 is closest to:
A. 6.85
B. 0.87
C. 1.15
D. 6.37
Answer:
Reference: 8A-10
A furniture manufacturer has a standard costing system based on standard direct
labor-hours (DLHs) as the measure of activity. Data from the companys flexible budget
for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
How much overhead was applied to products during the period to the nearest dollar?
A) $86,394
B) $88,440
C) $89,760
D) $92,555
Answer:
Estes Company has assembled the following data for its divisions for the past year:
Division B's average operating assets is:
A. $81,200
B. $2,080,000
C. $1,333,333
D. $130,000
Answer:
Aujla Corporation uses activity-based costing to determine product costs for external
financial reports. The company has provided the following data concerning its
activity-based costing system:
Assuming that actual activity turns out to be the same as expected activity, the total
amount of overhead cost allocated to Product X would be closest to:
A. $235,000
B. $563,000
C. $316,600
D. $357,500
Answer:
Dieringer Corporation's most recent balance sheet and income statement appear below:
The average collection period for Year 2 is closest to:
A. 1.1 days
B. 0.9 days
C. 41.8 days
D. 44.6 days
Answer:
Marrin Corporation makes three products that use the current constraint-a particular
type of machine. Data concerning those products appear below:
Rank the products in order of their current profitability from most profitable to least
profitable. In other words, rank the products in the order in which they should be
emphasized.
A. KZ,XB,ZP
B. ZP,KZ,XB
C. XB,ZP,KZ
D. KZ,ZP,XB
Answer:
Reference: 8A-11
A manufacturer of playground equipment uses a standard costing system in which
standard machine-hours (MHs) is the measure of activity. Data from the companys
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What was the fixed manufacturing overhead budget variance for the period to the
nearest dollar?
A) $881 U
B) $484 U
C) $395 U
D) $1,500 F
Answer:
Tennison Corporation has two major business segments-Consumer and Commercial.
Data for the segment and for the company for May appear below:
In addition, common fixed expenses totaled $371,000 and were allocated as follows:
$186,000 to the Consumer business segment and $185,000 to the Commercial business
segment.
The contribution margin of the Commercial business segment is:
A. $769,000
B. $272,000
C. $313,000
D. $86,000
Answer:
Operating data from Tindall Company for last year follows:
The residual income was:
A. $18,000
B. $10,000
C. $12,000
D. $16,000
Answer:
In a standard cost system, the volume variance will be unfavorable when:
A. actual hours are greater than the denominator hours.
B. the standard hours allowed for the output of the period are less than the denominator
hours.
C. the standard hours allowed for the output of the period are greater than the actual
hours incurred.
D. actual hours are less than the denominator hours.
Answer:
In January, one of the processing departments at Seidl Corporation had ending work in
process inventory of $35,000. During the month, $111,000 of costs were added to
production and the cost of units transferred out from the department was $86,000.
In the department's cost reconciliation report for January, the cost of beginning work in
process inventory for the department would be:
A. $51,000
B. $10,000
C. $76,000
D. $60,000
Answer:
Last year Lawsby Company reported sales of $120,000 on its income statement. During
the year, accounts receivable increased by $10,000 and accounts payable increased by
$15,000. The company uses the direct method to determine the net cash provided by
operating activities on the statement of cash flows. The sales revenue adjusted to a cash
basis for the year would be:
A. $105,000
B. $125,000
C. $110,000
D. $115,000
Answer:
Electrical costs at one of Vanartsdalen 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 the variable and fixed
components of this cost, these estimates would be closest to:
A. $14.41 per machine-hour; $33,832 per month
B. $0.11 per machine-hour; $33,957 per month
C. $9.35 per machine-hour; $11,885 per month
D. $11.30 per machine-hour; $7,229 per month
Answer:
Reference: 8-5
Yewston Hotel bases its budgets on guest-days. The hotels static budget for April
appears below:
The total cost at the activity level of 3,300 guest-days per month should be:
A) $78,530
B) $93,060
C) $77,660
D) $64,860
Answer:
Harbor Company, a retailer, had cost of goods sold of $170,000 last year. The beginning
inventory balance was $20,000 and the ending inventory balance was $24,000. The
company's inventory turnover was closest to:
A. 7.08
B. 7.73
C. 3.86
D. 8.50
Answer:
Reference: 8-8
Diiorio Clinic uses client-visits as its measure of activity. During February, the clinic
budgeted for 2,700 client-visits, but its actual level of activity was 2,750 client-visits.
The clinic has provided the following data concerning the formulas used in its
budgeting and its actual results for February:
Data used in budgeting:
Actual results for February:
The medical supplies in the flexible budget for February would be closest to:
A) $19,332
B) $19,500
C) $20,055
D) $19,850
Answer:
Threets Corporation's most recent comparative balance sheet appears below:
The company's net income for the year was $109 and it paid a cash dividend. It did not
dispose of any property, plant, and equipment during the year. The company did not
issue any bonds payable or repurchase any of its own common stock.
The net cash provided by (used in) operating activities for the year was:
A. $120
B. $98
C. $(11)
D. $156
Answer:
Fjeld Corporation produces and sells two products. In the most recent month, Product
C66G had sales of $20,000 and variable expenses of $7,200. Product U11T had sales of
$19,000 and variable expenses of $8,400. And the fixed expenses of the entire company
were $21,740. If the sales mix were to shift toward Product C66G with total dollar sales
remaining constant, the overall break-even point for the entire company:
A. would increase.
B. would not change.
C. would decrease.
D. could increase or decrease.
Answer:
Conversion costs do NOT include:
A. depreciation.
B. direct materials.
C. indirect labor.
D. indirect materials.
Answer:
Atwich 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 5,100 units were started and 4,400 units were transferred to the second
processing department during the month. The following costs were incurred in the first
processing department during the month:
The ending inventory was 75% complete with respect to materials and 10% complete
with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A. $34.18
B. $39.93
C. $43.00
D. $45.15
Answer:
