The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to current assets show?
A) Inventory turnover of 7.11 times
B) Current ratio of 1.24
C) A 22% increase in current assets
D) Current assets as 26.61% of total assets
The security department that is evaluated on its ability to control costs when the
company compares actual costs to budget costs at a department store chain may be
classified as a(n)
A) cost center.
B) investment center.
C) profit center.
D) revenue center.
The managerial accountant at the Umbrella Manufacturing Plant allocates
manufacturing overhead from each activity to the individual jobs that use the activities
for Product A.
Product A:
Two Products
Compute the total MOH allotted to Product A. Next, use the same Activity Cost
Allocation Rates to compute the Activity Cost Allocation Rates and the MOH allocated
to produce two products. What is the total MOH allocated to manufacture two
products?
The Bedford Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the accounts receivable turnover for the current year?
A) 27.11 times
B) 0.04 times
C) 20 times
D) 13.4631 times
The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s book value per share of common stock on the last day of the
current year?
A) $4.33
B) $6.50
C) $25.00
D) $42.00
The managerial accountant at Space Right Office Cubicles calculates fixed overhead
variances to complete the August report. The actual fixed overhead cost in the month of
August was $56,400 and the budgeted fixed overhead cost was $58,100. The standard
hours in August were 3,200 and the standard rate per machine-hour was $18. Calculate
the standard fixed overhead cost allocated to production, the fixed overhead budget
variance, and the fixed overhead volume variance.
A) $58,100;$2,200 U;$1,200 F
B) $56,400;$1,300 U; $1,700 F
C) $57,600;$1,700 U;$500 F
D) $52,300;$1,200 U;$1,700 F
In a company that uses the direct method to prepare the statement of cash flows, the
amount of cash it uses to purchase inventory is computed as
A) cost of goods sold plus ending inventory.
B) cost of goods sold plus ending inventory, plus beginning inventory.
C) beginning inventory minus ending inventory, minus cost of goods sold.
D) cost of goods sold plus ending inventory, minus beginning inventory.
The performance report that highlights the center’s segment margin at a ________ may
include direct fixed expenses and direct fixed costs.
A) cost center
B) sales center
C) profit center
D) revenue center
The following data pertain to costs at Summit Company:
The variable cost per unit is
A) $3.75.
B) $15.00.
C) $18.75.
D) $11.25.
Cartman Enterprises management has budgeted the following amounts for its next fiscal
year:
If Cartman Enterprises can reduce fixed expenses by $16,000, how will breakeven sales
in units be affected?
A) Increase by 400 units
B) Increase by 1,600 units
C) Decrease by 400 units
D) Decrease by 1,600 units
The balance sheet for Blineberry Corporation follows:
Operating income during the period was $18,000, while cash dividends paid were
$17,400. The total use of cash at Blineberry Corporation during the year was
A) $28,500.
B) $48,050.
C) $8,200.
D) $39,850.
XYZ uses job costing. Actual manufacturing overhead for the period is $20,000 while
allocated manufacturing overhead is $18,000. What entry will close the manufacturing
overhead balance?
A) Debit the Manufacturing Overhead account and credit the Work-in-Process account
for $2,000.
B) Debit the Manufacturing Overhead account and credit the Cost of Goods Sold
account for $2,000.
C) Debit the Cost of Goods Sold account and credit the Finished Goods Inventory
account for $2,000.
D) Debit the Cost of Goods Sold account and credit the Manufacturing Overhead
account for $2,000.
Tom is the new accounting supervisor at Maryland Distributors. Tom requires all
accountants to join the IMA and Tom expects all accountants to commit to ethical
professional practice. Tom is asked to review the previous quarter audit reports that
were completed by the CPA firm. Tom reviews the reports and he discovers that an
accountant in the sales division did not participate in continuing education as required.
According to the IMA Statement of Ethical Professional Practice, which of the
following did the accountant violate when the accountant did not participate in
continuing education requirements?
A) Competence
B) Confidentiality
C) Integrity
D) Credibility
E) Leadership
The Bedford Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the inventory turnover for the current year?
A) 27.11 times
B) 13.66 times
C) 20 times
D) 16 times
A company uses the direct method to prepare the statement of cash flows. It presents
the following data on its financial statements:
*Relates solely to the acquisition of inventory
Which of the following is correct about inventory in the operating activities category of
the cash flow statement?
A) The decrease of $20,000 will be subtracted from net income.
B) The decrease of $20,000 will be added to net income.
C) The decrease of $20,000 will be subtracted from cost of goods sold to determine
payments to suppliers.
D) The decrease of $20,000 will be added to cost of goods sold to determine payments
to suppliers.
Which of the following cost of quality categories represent the cost incurred “lost
profits from lost customers?”
A) Prevention costs
B) Appraisal costs
C) External failure costs
D) Internal failure costs
The managerial accountant at Right Stripes T-Shirt Company reported the following
information:
How many units did Right Stripes T-Shirt Company sell to achieve the above listed
revenue? Compute the company’s contribution margin.
A) 95 units; $1.67
B) 950 units; $7,030
C) 7.5 units; $28,120
D) 750 units; $7,030
Sally wants to purchase a new sofa because she purchased a new home at the beach.
Sally visited two stores and she narrowed down her choices to a red sofa and a blue
sofa. Sally owns pets so she considers the cost of insurance to insure each sofa. Sally
compiled the following data and she realizes that the sales tax to purchase the sofa is
10% in her state.
Which sofa should Sally purchase? What costs are relevant in her decision? Why?
The ________reveals whether or not additional sales revenue can offset an increase in
costs in the flexible budget performance report.
A) flexible budget variance
B) static budget variance
C) sales volume variance
D) actual variance
A purpose of the statement of cash flows may be which of the following?
A) The purpose of the statement of cash flows is to evaluate the decisions made by the
board of directors.
B) The purpose of the statement of cash flows is to determine a company’s ability to
pay dividends to stockholders and interest and principle to its creditors.
C) The purpose of the statement of cash flows is to help predict the decisions of its
managers.
D) The purpose of the statement of cash flows is to report the earnings per share
For each of the following independent transactions, indicate the type of activity
(operating, investing or financing) and the effect on cash (amount and increase or
decrease).
Kent Coffee Shoppe total sales revenue is $850,000, its variable expenses total
$250,000, and its fixed expenses total $375,000. Compute the overall contribution
margin ratio and use the contribution margin ratio in the shortcut formula to predict the
breakeven point in dollars.
Buy the part and use facilities to make another product
Victoria Technologies makes a part used in the manufacture of digital cameras.
Management is
considering whether to continue manufacturing the part, or to buy the part from an
outside source at a cost of $24.00 per part. Victoria Technologies needs 60,000 parts per
year. The cost of manufacturing 60,000 parts is computed as follows:
If Victoria Technologies buys the part, it would pay $.60 per unit to transport the parts
to its manufacturing plant. Purchasing the part from an outside source would enable the
company to avoid 50% of fixed manufacturing overhead costs. Victoria Technologies’
factory space freed up by purchasing the part from an outside supplier could be used to
manufacture another product with a contribution margin of $70,000.
Describe the position of the CFO, the main function of the treasurer, and the main
function of the controller within the organization.
The managerial accountant at Managerial Funding Resources reported in 2014 its
earnings per share were $6.20 and the market price per share of its common stock is
$75. In 2013, the managerial accountant reported $3.10 earnings per share and the
market price was $40 per share.
Compute the price/earnings ratio at Managerial Funding Resources and discuss why the
managerial accountant is interested in the price/earnings ratio.
Standard Products Company recognizes variances from standards at the earliest
opportunity, and the quantity of direct materials purchased is equal to the quantity used.
The following information is available for the most recent month. Assume the
allocation base for fixed overhead costs is the number of units.
Journalize the allocation of overhead costs to Work in Process Inventory and closing
manufacturing overhead costs to overhead variances.
A corporation reported net income during the year of $28,500. The following items
were reported on the income statement and balance sheet.
Compute cash flows from operating activities using the indirect method.
