1) jam company uses the weighted-average method in its process costing system.
operating data for the painting department for the month of april appear below:
what were the equivalent units for conversion costs in the painting department for april?
a.78,680
b.77,500
c.72,300
d.81,280
2) loraine company applies manufacturing overhead to jobs using a predetermined
overhead rate of 70% of direct labor cost. any underapplied or overapplied overhead
cost is closed to cost of goods sold at the end of the month. during august, the following
transactions were recorded by the company:
the balance on august 1 in the raw materials inventory account was:
a.$4,500
b.$7,000
c.$9,000
d.$11,500
3) the same constrained resource is used by four different products at porraz
corporation. data concerning those products appear below:
the company does not have enough of the constrained resource to satisfy for demand of
all four products.
from the standpoint of the entire company, if it is a choice between sales of one unit of
one product versus another, which product should the salespersons emphasize?
a.y200
b.y300
c.y100
d.y400
4) a decrease in denominator level of activity will:
a.decrease the fixed portion of the predetermined overhead rate
b.increase the fixed portion of the predetermined overhead rate
c.decrease the variable portion of the predetermined overhead rate
d.increase the variable portion of the predetermined overhead rate
5) the coletti cleaning brigade company provides housecleaning services to its clients.
the company uses an activity-based costing system for its overhead costs. the company
has provided the following data from its activity-based costing system.
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
one particular client, the tubman family, requested 26 jobs during the year that required
a total of 104 hours of housecleaning. for this service, the client was charged $1,420.
required:
a. using the activity-based costing system, compute the customer margin for the tubman
family. round off all calculations to the nearest whole cent.
b. assume the company decides instead to use a traditional costing system in which all
costs are allocated to customers on the basis of cleaning hours. compute the margin for
the tubman family. round off all calculations to the nearest whole cent.
6) (ignore income taxes in this problem.) how much would you have to invest today in
the bank at an interest rate of 13% to have an annuity of $3,900 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.$19,500
b.$17,257
c.$2,118
d.$13,716
7) (ignore income taxes in this problem.) the management of cerra corporation is
considering three investment projects i, j, and k. project i would require an investment
of $18,000, project j of $42,000, and project k of $85,000. the present value of the cash
inflows would be $19,260 for project i, $45,780 for project j, and $91,800 for project k.
the profitability index of investment project j is closest to:
a.0.08
b.0.91
c.0.09
d.1.09
8) details of the manufacturing activity in amy company’s assembly department for the
month of december are given below:
all materials are added at the beginning of processing in the assembly department.
the equivalent units for labor and overhead for the month, using the fifo method, is:
a.90,000
b.70,000
c.80,000
d.74,000
9) kouba manufacturing corporation’s actual direct labor cost for the month of july was
$45,000. its labor rate variance for july was $1,000 unfavorable. its labor efficiency
variance was $5,000 favorable. what summary journal entry would kouba make to
record this information?
a.
b.
c.
d.
10) the following is last month’s contribution format income statement:
what is the company’s degree of operating leverage?
a.0.125
b.8.0
c.3.0
d.0.333
11) the lee company uses a job-order costing system. the following data were recorded
for june:
overhead is charged to production at 80% of direct materials cost. jobs 235, 237, and
238 were completed during june and transferred to finished goods. jobs 235 and 238
have been delivered to customers.
lee company’s cost of goods sold for june was:
a.$15,520
b.$10,170
c.$9,730
d.$14,640
12) spraque air uses two measures of activity, flights and passengers, in the cost
formulas in its budgets and performance reports. the cost formula for plane operating
costs is $40,520 per month plus $2,733 per flight plus $11 per passenger. the company
expected its activity in june to be 71 flights and 207 passengers, but the actual activity
was 70 flights and 205 passengers. the actual cost for plane operating costs in june was
$239,580.
the activity variance for plane operating costs in june would be closest to:
a.$2,755 u
b.$2,755 f
c.$2,740 f
d.$2,740 u
13) brubacher company makes four products in a single facility. these products have the
following unit product costs:
the grinding machines are potentially the constraint in the production facility. a total of
20,500 minutes are available per month on these machines.
direct labor is a variable cost in this company.
how many minutes of grinding machine time would be required to satisfy demand for
all four products?
a.14,000
b.18,900
c.20,500
d.22,400
14) (ignore income taxes in this problem.) the wisbley company is contemplating the
purchase of a helicopter for its executives to use in their business trips. this helicopter
could be either purchased or leased from the manufacturer. the useful life of the
helicopter is four years. data concerning these two alternatives follow:
if the helicopter is leased, it would be returned to the manufacturer in four years.
wisbley’s required rate of return is 22%.
the present value of the salvage value of the helicopter, if the helicopter is purchased,
would be:
a.$121,770
b.$162,360
c.$114,210
d.$99,900
15) (ignore income taxes in this problem.) jones and company has just purchased a new
piece of equipment, the cost characteristics of which are given below:
the company uses a required rate of return of 10% and depreciates equipment using the
straight-line method.
the internal rate of return of the investment is closest to:
a.16%
b.18%
c.20%
d.22%
16) excerpts from shelton corporation’s most recent balance sheet appear below:
sales on account in year 2 amounted to $1,320 and the cost of goods sold was $890.
the accounts receivable turnover for year 2 is closest to:
a.0.80
b.15.11
c.17.00
d.1.25
17) (ignore income taxes in this problem.) burwinkel corporation is considering a
project that would require an investment of $252,000 and would last for 7 years. the
incremental annual revenues and expenses generated by the project during those 7 years
would be as follows:
the scrap value of the project’s assets at the end of the project would be $28,000. the
payback period of the project is closest to:
a.1.1 years
b.1.3 years
c.1.4 years
d.1.5 years
18) cole laboratories makes and sells a lawn fertilizer called fastgro. the company has
developed standard costs for one bag of fastgro as follows:
the company had no beginning inventories of any kind on jan. 1. variable overhead is
applied to production on the basis of standard direct labor-hours. during january, the
following activity was recorded by the company:
production of fastgro: 4,000 bags
direct materials purchased: 85,000 pounds at a cost of $32,300
direct labor worked: 390 hours at a cost of $4,875
variable overhead incurred: $1,475
inventory of direct materials on jan. 31: 3,000 pounds
the labor rate variance for january is:
a.$475 f
b.$475 u
c.$585 f
d.$585 u