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1) a company has provided the following data:
if the dollar contribution margin per unit is increased by 10%, total fixed cost is
decreased by 20%, and all other factors remain the same, net operating income will:
a.increase by $61,000
b.increase by $20,000
c.increase by $3,500
d.increase by $11,000
2) at the beginning of the year, manufacturing overhead for the year was estimated to be
$702,450. at the end of the year, actual direct labor-hours for the year were 33,100
hours, the actual manufacturing overhead for the year was $697,450, and manufacturing
overhead for the year was overapplied by $40,680. if the predetermined overhead rate is
based on direct labor-hours, then the estimated direct labor-hours at the beginning of the
year used in the predetermined overhead rate must have been:
a.31,500 direct labor-hours
b.29,452 direct labor-hours
c.31,276 direct labor-hours
d.33,100 direct labor-hours
3) manufacturing overhead:
a.can be either a variable cost or a fixed cost
b.includes the costs of shipping finished goods to customers
c.includes all factory labor costs
d.includes all fixed costs
4) hirons corporation keeps careful track of the time required to fill orders. data
concerning a particular order appear below:
the manufacturing cycle efficiency (mce) was closest to:
a.0.11
b.0.15
c.0.04
d.0.53
5) 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 working capital at the end of year 2 is:
a.$400
b.$70
c.$750
d.$700
6) coles company, inc. makes and sells a single product, product r. three yards of
material k are needed to make one unit of product r. budgeted production of product r
for the next five months is as follows:
the company wants to maintain monthly ending inventories of material k equal to 20%
of the following month's production needs. on july 31, this requirement was not met
since only 2,500 yards of material k were on hand. the cost of material k is $0.85 per
yard. the company wants to prepare a direct materials purchase budget for the rest of
the year.
the total needs (i.e., production requirements plus desired ending inventory) of material
k for the month of november are:
a.37,800 yards
b.44,940 yards
c.37,380 yards
d.45,360 yards
7) babbel company is a manufacturing firm that uses job-order costing. the company's
inventory balances were as follows at the beginning and end of the year:
the company applies overhead to jobs using a predetermined overhead rate based on
machine-hours. at the beginning of the year, the company estimated that it would work
38,000 machine-hours and incur $266,000 in manufacturing overhead cost. the
following transactions were recorded for the year:
raw materials were purchased, $300,000.
raw materials were requisitioned for use in production, $297,000 $(281,000 direct and
$16,000 indirect).
the following employee costs were incurred: direct labor, $389,000; indirect labor,
$62,000; and administrative salaries, $176,000.
selling costs, $160,000.
factory utility costs, $19,000.
depreciation for the year was $143,000 of which $137,000 is related to factory
operations and $6,000 is related to selling, general, and administrative activities.
manufacturing overhead was applied to jobs. the actual level of activity for the year was
34,000 machine-hours.
sales for the year totaled $1,283,000.
required:
a. prepare a schedule of cost of goods manufactured in good form.
b. was the overhead underapplied or overapplied? by how much?
c. prepare an income statement for the year in good form. the company closes any
underapplied or overapplied overhead to cost of goods sold.
8) mcbee products inc. makes two productsc38s and v81z. product c38s's selling price
is $91.00 and its unit variable cost is $72.80. product v81z's selling price is $200.00 and
its unit variable cost is $180.00. the monthly demand is 890 units for product c38s and
680 units for v81z. the constrained resource is a particular machine that is available for
10,000 minutes each month. each unit of product c38s requires 7 minutes on this
machine and each unit of product v81z requires 10 minutes on this machine.
what is the maximum contribution margin the company can earn per month?
a.$21,920
b.$29,798
c.$23,738
d.$22,869
9) given the following data:
return on investment (roi) would be:
a.10%
b.20%
c.16.7%
d.80%
10) management of parrent corporation has asked your help as an intern in preparing
some key reports for april. the company started the month with raw materials
inventories of $32,000. during the month, the company made raw materials purchases
amounting to $68,000. at the end of the month, raw materials inventories totaled
$35,000. direct labor cost was $43,000 and manufacturing overhead was $62,000. the
beginning balance in the work in process account was $19,000 and the ending balance
was $12,000. the beginning balance in the finished goods account was $35,000 and the
ending balance was $58,000. sales totaled $240,000. selling expense was $18,000 and
administrative expense was $42,000.
the total manufacturing cost for april was:
a.$170,000
b.$173,000
c.$62,000
d.$105,000
11) hounshell corporation produces and sells a single product. data concerning that
product appear below:
required:
a. assume the company's monthly target profit is $20,880. determine the unit sales to
attain that target profit. show your work!
b. assume the company's monthly target profit is $6,960. determine the dollar sales to
attain that target profit. show your work!
12) abis corporation uses the weighted-average method in its process costing system.
this month, the beginning inventory in the first processing department consisted of 800
units. the costs and percentage completion of these units in beginning inventory were:
a total of 9,200 units were started and 8,200 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 80% complete with respect to materials and 20% 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 cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
a.$73,829
b.$18,457
c.$92,286
d.$31,891
13) mzimba sofa company has developed the following manufacturing overhead
standards for its sofa production.
manufacturing overhead at mzimba is applied to production on the basis of standard
machine-hours. the above standards were based on an expected annual volume of
20,000 sofas. the actual results last year were as follows:
what was mzimba's fixed manufacturing overhead volume variance?
a.$12,080 favorable
b.$42,920 unfavorable
c.$61,000 unfavorable
d.$73,080 favorable
14) hooper corporation produces and sells two models of vacuum cleaners, standard and
deluxe. the company records show the following monthly data relating to these two
products:
the company's total monthly fixed cost is $15,000.
the break-even in sales dollars for the expected sales mix is closest to:
a.$160,772
b.$95,178
c.$109,091
d.$175,644
15) a tile manufacturer has supplied the following data:
the company's contribution margin ratio is closest to:
a.42.7%
b.57.3%
c.45.8%
d.21.0%
16) last year a firm had taxable cash receipts of $800,000 and the tax rate was 30%. the
after-tax net cash inflow from these receipts was:
a.$800,000
b.$640,000
c.$560,000
d.$240,000
17) the most recent balance sheet and income statement of mackinaw corporation
appear below:
cash dividends were $37. the net cash provided by (used by) operations for the year
was:
a.$8
b.$136
c.$206
d.$152
18) the management of wymer corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. the company's controller
has provided an example to illustrate how this new system would work. in this example,
the allocation base is machine-hours and the estimated amount of the allocation base for
the upcoming year is 50,000 machine-hours. in addition, capacity is 59,000
machine-hours and the actual level of activity for the year is 53,300 machine-hours. all
of the manufacturing overhead is fixed and is $1,622,500 per year. for simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity. it is further assumed that this is also the actual
amount of manufacturing overhead for the year. a number of jobs were worked on
during the year, one of which was job j44v. this job required 230 machine-hours.
if the company bases its predetermined overhead rate on the estimated amount of the
allocation base for the upcoming year, by how much was manufacturing overhead
underapplied or overapplied?
a.$156,750 overapplied
b.$107,085 overapplied
c.$107,085 underapplied
d.$156,750 underapplied
19) which of the following variances is caused by a difference between the denominator
activity in the predetermined overhead rate and the standard hours allowed for the
actual production of the period?
a.variable overhead rate variance
b.variable overhead efficiency variance
c.fixed manufacturing overhead budget variance
d.fixed manufacturing overhead volume variance
20) financial statements for larkins company appear below:
dividends during year 2 totaled $135 thousand, of which $12 thousand were preferred
dividends. the market price of a share of common stock on december 31, year 2 was
$150.
larkins company's earnings per share of common stock for year 2 was closest to:
a.$25.00
b.$17.50
c.$7.21
d.$16.83
