1) In making the decision to invest in the model 230 machine, the opportunity cost was:
A) $278,000
B) $305,000
C) $207,000
D) $266,000
2) Which of the following is classified as a direct labor cost?
Wages of assembly-line workers Wages of a factory supervisor
A) No No
B) Yes Yes
C) No Yes
D) Yes No
3) Rollison Corporation has two divisions: Retail Division and Wholesale Division. The
following data are for the most recent operating period:
The common fixed expenses of the company are $76,300.
The Wholesale Division’s break-even sales in dollars is closest to:
A.$164,286
B.$217,686
C.$273,286
D.$469,884
4) Wyly Inc. produces and sells a single product. The selling price of the product is
$170.00 per unit and its variable cost is $62.90 per unit. The fixed expense is $356,643
per month.
The break-even in monthly dollar sales is closest to:
A.$963,900
B.$628,881
C.$566,100
D.$356,643
5) Ortman Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in May.
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 May is:
A.$1,264 F
B.$1,400 F
C.$1,264 U
D.$1,400 U
6) Assume that sufficient time is available on the constrained machine to satisfy
demand for all but the least profitable product. Up to how much should the company be
willing to pay to acquire more of this constrained resource?
A) $15.30 per minute
B) $18.80 per minute
C) $77.08 per unit
D) $122.10 per unit
7) Insider Corporation has two divisions, J and K. During March, the contribution
margin in Division J was $30,000. The contribution margin ratio in Division K was
40%, its sales were $125,000, and its segment margin was $32,000. The common fixed
expenses in the company were $40,000, and the company’s net operating income was
$18,000. The segment margin for Division J was:
A.$26,000
B.$32,000
C.$8,000
D.$58,000
8) What is the differential cost of Alternative B over Alternative A, including all of the
relevant costs?
A) $150,000
B) $100,000
C) $125,000
D) $50,000
9) Tout Corporation makes a product that has the following direct labor standards:
The company budgeted for production of 6,400 units in October, but actual production
was 6,500 units. The company used 610 direct labor-hours to produce this output. The
actual direct labor rate was $21.80 per hour.
The labor efficiency variance for October is:
A.$872 F
B.$872 U
C.$880 U
D.$880 F
10) The company’s total asset turnover for Year 2 is closest to:
A.5.29
B.0.19
C.1.04
D.0.96
11) The following standards for variable overhead have been established for a company
that makes only one product:
The following data pertain to operations for the last month:
Required:
a. What is the variable overhead rate variance for the month?
b. What is the variable overhead efficiency variance for the month?
12) How much would you have to invest today in the bank at an interest rate of 5% to
have an annuity of $1,400 per year for 5 years, with nothing left in the bank at the end
of the 5 years? Select the amount below that is closest to your answer.
A.$6,667
B.$6,061
C.$7,000
D.$1,098
13) Bracken Corporation is a small wholesaler of gourmet food products. Data
regarding the store’s operations follow:
Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000
for January.
Collections are expected to be 80% in the month of sale, 17% in the month following
the sale, and 3% uncollectible.
The cost of goods sold is 75% of sales.
The company would like to maintain ending merchandise inventories equal to 70% of
the next month’s cost of goods sold. Payment for merchandise is made in the month
following the purchase.
Other monthly expenses to be paid in cash are $21,800.
Monthly depreciation is $19,000.
Ignore taxes.
December cash disbursements for merchandise purchases would be:
A.$178,500
B.$225,000
C.$255,000
D.$252,750
14) Electrical costs at one of Kantola Corporations factories are listed below:
Management believes that electrical cost is a mixed cost that depends on
machine-hours. Use the high-low method to estimate the variable and fixed components
of this cost. Compute the variable component first, rounding off to the nearest whole
cent. Then compute the fixed component, rounding off to the nearest whole dollar.
Those estimates are closest to:
A) $0.14 per machine-hour; $36,336 per month
B) $10.19 per machine-hour; $36,470 per month
C) $7.48 per machine-hour; $9,708 per month
D) $7.29 per machine-hour; $10,392 per month
15) The simple rate of return on the investment is:
A.26.67%
B.16.67%
C.36.67%
D.10.00%
16) The net cash provided by financing activities for the year was:
A.$100,000
B.$550,000
C.$180,000
D.$680,000
17) Aguilera Industries is a division of a major corporation. Data concerning the most
recent year appears below:
The division’s margin is closest to:
A.32.3%
B.25.0%
C.29.2%
D.7.3%
18) Mormino Corporation’s income statement appears below:
The company’s gross margin percentage is closest to:
A.1888.9%
B.5.3%
C.41.1%
D.69.9%
19) Jiminian Clinic uses client-visits as its measure of activity. During March, the clinic
budgeted for 3,700 client-visits, but its actual level of activity was 3,660 client-visits.
The clinic 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 medical supplies in the flexible budget for March would be closest to:
A.$18,270
B.$18,607
C.$18,450
D.$19,016