1) harris company uses a standard cost system in which it applies manufacturing
overhead to units of product on the basis of standard direct labor-hours (dlhs). the
company has provided the following data:
the volume variance would be:
a.$2,500 f
b.$1,800 f
c.$1,800 u
d.$1,500 f
2) what is the company’s degree of operating leverage?
a.0.12
b.2.5
c.0.4
d.3.3
3) poma manufacturing corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on
direct labor-hours (dlhs). the company has two products, r78s and n32y, about which it
has provided the following data:
the company’s estimated total manufacturing overhead for the year is $1,427,040 and
the company’s estimated total direct labor-hours for the year is 24,000.
the company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. data for this proposed activity-based costing
system appear below:
the unit product cost of product n32y under the activity-based costing system is closest
to:
a.$136.00
b.$76.70
c.$59.30
d.$136.16
4) financial statements for oram company appear below:
dividends during year 2 totaled $161 thousand, of which $10 thousand were preferred
dividends. the market price of a share of common stock on december 31, year 2 was
$610.
oram company’s accounts receivable turnover for year 2 was closest to:
a.22.6
b.15.8
c.14.9
d.10.4
5) hackney company, which has only one product, has provided the following data
concerning its most recent month of operations:
the total contribution margin for the month under the variable costing approach is:
a.$47,000
b.$117,500
c.$12,600
d.$84,600
6) (ignore income taxes in this problem.) isomer industrial training corporation is
considering the purchase of new presentation equipment at a cost of $150,000. the
equipment has an estimated useful life of 10 years with an expected salvage value of
zero. the equipment is expected to generate net cash inflows of $35,000 per year in each
of the 10 years. isomer’s discount rate is 16%. isomer uses the straight-line method of
depreciation for its assets.
what is the payback period of the presentation equipment?
a.2.3 years
b.3.0 years
c.4.3 years
d.5.8 years
7) indiana corporation produces a single product that it sells for $9 per unit. during the
first year of operations, 100,000 units were produced and 90,000 units were sold.
manufacturing costs and selling and administrative expenses for the year were as
follows:
what was indiana corporation’s net operating income for the year using variable
costing?
a.$181,000
b.$271,000
c.$281,000
d.$371,000
8) last year jack company had a net income of $270,000, income tax expense of
$50,000, and interest expense of $20,000. the company’s times interest earned was
closest to:
a.17.00
b.10.00
c.13.50
d.14.50
9) aymond electronics corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours (mhs). the
company had budgeted its fixed manufacturing overhead cost at $42,700 for the month
and its level of activity at 2,000 mhs. the actual total fixed manufacturing overhead was
$44,100 for the month and the actual level of activity was 1,800 mhs. what was the
fixed manufacturing overhead budget variance for the month to the nearest dollar?
a.$5,670 favorable
b.$1,400 favorable
c.$5,670 unfavorable
d.$1,400 unfavorable
10) arranging for a shipment of a number of different products to a customer is an
example of an activity at which of the following levels?
a.unit-level activity
b.batch-level activity
c.customer-level activity
d.organization-sustaining activity
11) davie corporation is preparing its manufacturing overhead budget for the fourth
quarter of the year. the budgeted variable factory overhead rate is $6.00 per direct
labor-hour; the budgeted fixed factory overhead is $92,000 per month, of which
$16,000 is factory depreciation.
if the budgeted direct labor time for november is 9,000 hours, then the total budgeted
cash disbursements for november must be:
a.$130,000
b.$146,000
c.$70,000
d.$76,000
12) (ignore income taxes in this problem.) anne, inc., is considering the purchase of a
machine that would cost $200,000 and would last for 8 years. at the end of 8 years, the
machine would have a salvage value of $46,000. the machine would reduce labor and
other costs by $31,000 per year. additional working capital of $7,000 would be needed
immediately. all of this working capital would be recovered at the end of the life of the
machine. the company requires a minimum pretax return of 8% on all investment
projects.
the combined present value of the working capital needed at the beginning of the
project and the working capital released at the end of the project is closest to:
a.-$5,960
b.-$3,220
c.$33,229
d.$0
13) which of the following is not one of the three major customer value propositions
discussed in the text?
a.customer intimacy
b.operational excellence
c.zero defects
d.product leadership
14) wertman corporation produces and sells a single product with the following
characteristics:
the company is currently selling 3,000 units per month. fixed expenses are $215,000 per
month. consider each of the following questions independently.
this question is to be considered independently of all other questions relating to
wertman corporation. refer to the original data when answering this question.
the marketing manager would like to cut the selling price by $19 and increase the
advertising budget by $14,000 per month. the marketing manager predicts that these
two changes would increase monthly sales by 1,000 units. what should be the overall
effect on the company’s monthly net operating income of this change?
a.increase of $177,000
b.increase of $51,000
c.decrease of $6,000
d.decrease of $51,000
15) quill corporation uses the fifo method in its process costing system. operating data
for the cutting department for the month of march appear below:
according to the company’s records, the conversion cost in beginning work in process
inventory was $5,018 at the beginning of march. additional conversion costs of
$420,644 were incurred in the department during the month.
what would be the cost per equivalent unit for conversion costs for march? (round off to
three decimal places.)
a.$8.413
b.$7.586
c.$7.534
d.$7.720
16) if a company applies overhead to jobs on the basis of a predetermined overhead
rate, a credit balance in the manufacturing overhead account at the end of any period
means that:
a.more overhead cost has been charged to jobs than has been incurred during the period
b.more overhead cost has been incurred during the period than has been charged to jobs
c.the amount of overhead cost charged to jobs is greater than the estimated cost for the
period
d.the amount of overhead cost charged to jobs is less than the estimated overhead cost
for the period
17) a favorable materials price variance coupled with an unfavorable material usage
variance would most likely result from:
a.labor efficiency problems
b.machine efficiency problems
c.the purchase and use of higher than standard quality material
d.the purchase and use of lower than standard quality material
18) electrical costs at one of noyd 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, the estimate of the fixed component of electrical cost per
month is closest to:
a.$9,266
b.$10,232
c.$10,244
d.$9,881