1) Ignoring any cash flows from intangible benefits, to the nearest whole dollar how
large would the salvage value of the automated equipment have to be to make the
investment in the automated equipment financially attractive?
A.$24,318
B.$514,020
C.$673,637
D.$127,991
2) Dratif Corporation’s working capital is $33,000 and its current liabilities are $80,000.
The corporation’s current ratio is closest to:
A.1.41
B.0.59
C.3.42
D.0.41
3) Spomer Corporation’s inventory at the end of Year 2 was $114,000 and its inventory
at the end of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2.
The company’s inventory turnover for Year 2 is closest to:
A.5.92
B.1.05
C.6.07
D.6.23
4) The direct labor budget is based on:
A.the desired ending inventory of finished goods.
B.the beginning inventory of finished goods.
C.the required production for the period.
D.the required materials purchases for the period.
5) Hernande Corporation has provided the following data:
The company’s earnings per share for Year 2 is closest to:
A.$4.25 per share
B.$0.43 per share
C.$0.61 per share
D.$0.75 per share
6) The formula for target cost is:
A.Target cost = Anticipated selling price – Desired profit.
B.Target cost = Unit cost + (Markup percentage x Unit cost)
C.Target cost = Units sold x Unit cost traceable to product
D.Target cost = (Desired return on assets employed + Selling and administrative
expenses) / (Units sold x Unit product cost)
7) Nickolls Corporation manufactures and sells one product. The following information
pertains to the company’s first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 30,000 units and sold 27,000 units. The company’s only product is sold for
$230 per unit.
Assume that the company uses a variable costing system that assigns $18 of direct labor
cost to each unit that is produced. The net operating income under this costing system
is:
A.$78,000
B.$405,000
C.$351,000
D.$594,000
8) The company’s net cash used in investing activities is:
A.$6,000
B.$54,000
C.$24,000
D.$44,000
9) The work in process inventory at the end of November after allocation of any
underapplied or overapplied manufacturing overhead for the month is closest to:
A.$6,520
B.$6,889
C.$6,551
D.$6,920
10) Spirer Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its budgets and performance reports. During September,
the company budgeted for 6,700 units, but its actual level of activity was 6,750 units.
The company has provided the following data concerning the formulas used in its
budgeting and its actual results for September:
Data used in budgeting:
Actual results for September:
The activity variance for net operating income in September would be closest to:
A.$1,515 U
B.$1,515 F
C.$605 F
D.$605 U
