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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 total cost transferred from the first processing department to the next processing
department during the month is closest to:
A. $366,430
B. $284,600
C. $309,200
D. $282,858
Answer:
Dosier Corporation has a standard cost system in which it applies manufacturing
overhead to products on the basis of standard machine-hours (MHs). The company has
provided the following data for the most recent month:
What was the fixed manufacturing overhead budget variance for the month?
A) $2,000 unfavorable
B) $2,000 favorable
C) $610 unfavorable
D) $610 favorable
Answer:
Hadlock Company, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the total period cost for the month under the variable costing approach?
A. $125,600
B. $108,800
C. $176,800
D. $68,000
Answer:
The Chase Company uses a standard cost system in which manufacturing overhead
costs are applied to products on the basis of standard machine-hours. For November, the
company's flexible budget for manufacturing overhead showed the following total
budgeted costs at the denominator activity level of 40,000 machine-hours:
During November 42,000 machine-hours were used to complete 13,200 units of product
with the following actual overhead costs:
The standard time allowed to complete one unit of product is 3.6 machine-hours.
The variable overhead efficiency variance for utilities cost for November was:
A. $2,760 favorable
B. $3,760 unfavorable
C. $3,760 favorable
D. $1,000 favorable
Answer:
Reference: 8B-4
Karo Corporation has provided the following data concerning its direct labor costs for
December: The journal entry to record the incurrence of direct labor costs in
December would include the following for Work in Process:
A) Credit of $142,780
B) Debit of $142,780
C) Debit of $124,012
D) Credit of $124,012
Answer:
Data from Saldivar Corporation's most recent balance sheet appear below:
A total of 150,000 shares of common stock and 40,000 shares of preferred stock were
outstanding at the end of the year. The book value per share is closest to:
A. $2.73
B. $5.00
C. $6.53
D. $7.87
Answer:
Reference: 8-18
Brothern Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its flexible budgets. During May, the company budgeted
for 6,800 units, but its actual level of activity was 6,820 units. The company has
provided the following data concerning the formulas used in its budgeting and its actual
results for May:
Data used in budgeting:
Actual results for May:
The net operating income in the planning budget for May would be closest to:
A) $22,149
B) $22,279
C) $24,204
D) $23,960
Answer:
Beall Industries is a division of a major corporation. Last year the division had total
sales of $20,160,000, net operating income of $1,592,640, and average operating assets
of $8,000,000.
The division's turnover is closest to:
A. 2.52
B. 2.10
C. 0.20
D. 12.66
Answer:
The following partially completed T-accounts summarize transactions for Fabatz
Company during the year:
The direct labor cost was:
A. $8,700
B. $12,000
C. $11,700
D. $14,200
Answer:
Rubyor Corporation bases its predetermined overhead rate on variable manufacturing
overhead cost of $10.70 per machine-hour and fixed manufacturing overhead cost of
$821,104 per period. If the denominator level of activity is 7,300 machine-hours, the
variable element in the predetermined overhead rate would be:
A. $112.48
B. $123.18
C. $121.66
D. $10.70
Answer:
Residual income is a better measure for performance evaluation of an investment center
manager than return on investment because:
A. the problems associated with measuring the asset base are eliminated.
B. desirable investment decisions will not be rejected by divisions that already have a
high ROI.
C. only the gross book value of assets needs to be calculated.
D. returns do not increase as assets are depreciated.
Answer:
Hardouin Company uses the weighted-average method in its process costing system.
The first processing department, the Welding Department, started the month with
22,000 units in its beginning work in process inventory that were 20% complete with
respect to conversion costs. The conversion cost in this beginning work in process
inventory was $23,320. An additional 97,000 units were started into production during
the month and 101,000 units were completed in the Welding Department and
transferred to the next processing department. There were 18,000 units in the ending
work in process inventory of the Welding Department that were 40% complete with
respect to conversion costs. A total of $529,380 in conversion costs were incurred in the
department during the month.
What would be the cost per equivalent unit for conversion costs for the month? (Round
off to three decimal places.)
A. $5.300
B. $5.458
C. $4.603
D. $5.108
Answer:
Starwalt Corporation produces and sells a single product. The company has provided its
contribution format income statement for March.
If the company sells 7,300 units, its net operating income should be closest to:
A. $46,700
B. $75,100
C. $59,100
D. $71,199
Answer:
Scheidel Enterprises, Inc. produces and sells a single product whose selling price is
$190.00 per unit and whose variable expense is $81.70 per unit. The company's
monthly fixed expense is $682,290.
Assume the company's monthly target profit is $21,000. The unit sales to attain that
target profit are closest to:
A. 8,608 units
B. 6,494 units
C. 6,268 units
D. 3,702 units
Answer:
Heller Corporation uses the weighted-average method in its process costing system.
Data concerning the first processing department for the most recent month are listed
below:
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.
What are the equivalent units for materials for the month in the first processing
department?
A. 840
B. 9,140
C. 9,700
D. 8,300
Answer:
Hick Corporation's most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $60 thousand. Dividends on
preferred stock totaled $20 thousand. The market price of common stock at the end of
Year 2 was $9.57 per share.
The dividend yield ratio for Year 2 is closest to:
A. 1.05%
B. 4.18%
C. 75.00%
D. 3.13%
Answer:
Reference: 8-20
Herard Corporation manufactures and sells a single product. The company uses units as
the measure of activity in its flexible budgets. During March, the company budgeted for
7,900 units, but its actual level of activity was 7,890 units. The company has provided
the following data concerning the formulas used in its budgeting and its actual results
for March:
Data used in budgeting:
Actual results for March:
The direct materials in the flexible budget for March would be closest to:
A) $117,847
B) $119,928
C) $117,549
D) $120,080
Answer:
When the actual direct labor-hours is less than the standard direct labor-hours allowed
for the actual output of the period, the journal entry would include:
A) Debit to Wages Payable; Credit to Labor Efficiency Variance
B) Debit to Work-In-Process; Credit to Labor Efficiency Variance
C) Debit to Wages Payable; Debit to Labor Efficiency Variance
D) Debit to Work-In-Process; Debit to Labor Efficiency Variance
Answer:
Compound Q11H is a raw material used to make Grater Corporation's major product.
The standard cost of compound Q11H is $23.00 per ounce and the standard quantity is
3.8 ounces per unit of output. Data concerning the compound for October appear below:
The raw material was purchased on account.
The debits to the Raw Materials account for October would total:
A. $52,900
B. $52,440
C. $48,760
D. $53,130
Answer:
Last year, Salada Corporation's variable costing net operating income was $97,000.
Fixed manufacturing overhead costs released from inventory under absorption costing
amounted to $14,000. What was the absorption costing net operating income last year?
A. $14,000
B. $111,000
C. $97,000
D. $83,000
Answer:
Reference: 8-51
The following standards for variable manufacturing overhead have been established for
a company that makes only one product:
The following data pertain to operations for the last month:
What is the variable overhead rate variance for the month?
A) $3,721 F
B) $3,721 U
C) $3,440 F
D) $3,440 U
Answer:
The market price of XYZ Company's common stock dropped from $25 to $21 per
share. The dividend paid per share remained unchanged. The company's dividend
payout ratio would:
A. increase.
B. decrease.
C. be unchanged.
D. impossible to determine without more information.
The dividend payout ratio is unaffected by market price (e.g., Dividend payout ratio =
Dividends per share ÷ Earnings per share)
Answer:
What is the effect of a purchase of inventory on account on the current ratio and on
working capital, respectively? (Assume a current ratio greater than one prior to this
transaction.)
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
Shown below is the sales forecast for Cooper Inc. for the first four months of the
coming year.
On average, 50% of credit sales are paid for in the month of the sale, 30% in the month
following sale, and the remainder are paid two months after the month of the sale.
Assuming there are no bad debts, the expected cash inflow in March is:
A. $138,000
B. $122,000
C. $119,000
D. $108,000
Answer:
A company that makes organic fertilizer has supplied the following data:
The company's margin of safety in units is closest to:
A. 471,429 units
B. 501,563 units
C. 601,524 units
D. 194,043 units
Answer:
The Immanuel Company has just obtained a request for a special order of 6,000 jigs to
be shipped at the end of the month at a selling price of $7 each. The company has a
production capacity of 90,000 jigs per month with total fixed production costs of
$144,000. At present, the company is selling 80,000 jigs per month through regular
channels at a selling price of $11 each. For these regular sales, the cost for one jig is:
If the special order is accepted, Immanuel will not incur any selling expense; however,
it will incur shipping costs of $0.30 per unit. Total fixed production cost would not be
affected by this order.
At what selling price per unit should Immanuel be indifferent between accepting or
rejecting the special offer?
A. $7.40
B. $7.70
C. $6.40
D. $4.90
Answer:
Wesi Corporation prepares its statement of cash flows using the direct method. Which
of the following should Wesi classify as an operating activity on its statement?
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
Cadarette Corporation's most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $40 thousand. Dividends on
preferred stock totaled $10 thousand. The market price of common stock at the end of
Year 2 was $17.73 per share.
The earnings per share of common stock for Year 2 is closest to:
A. $1.00
B. $1.60
C. $1.43
D. $0.90
Answer:
Desrevisseau Inc., a manufacturing company, has provided the following data for the
month of August. The balance in the Work in Process inventory account was $10,000 at
the beginning of the month and $22,000 at the end of the month. During the month, the
company incurred direct materials cost of $63,000 and direct labor cost of $39,000. The
actual manufacturing overhead cost incurred was $40,000. The manufacturing overhead
cost applied to Work in Process was $43,000. The cost of goods manufactured for
August was:
A. $133,000
B. $142,000
C. $145,000
D. $130,000
Answer:
Iwasaki Inc. is considering whether to continue to make a component or to buy it from
an outside supplier. The company uses 13,000 of the components each year. The unit
product cost of the component according to the company's cost accounting system is
given as follows:
Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 30%
is avoidable if the component were bought from the outside supplier. In addition,
making the component uses 1 minute on the machine that is the company's current
constraint. If the component were bought, this machine time would be freed up for use
on another product that requires 2 minutes on this machine and that has a contribution
margin of $5.20 per unit.
When deciding whether to make or buy the component, what cost of making the
component should be compared to the price of buying the component?
A. $22.40
B. $19.80
C. $17.28
D. $19.88
Answer:
