Impala Industries manufactures a component used by car manufacturers. Impala can
produce 1,000,000 components per year. A foreign car manufacturer has approached
Impala with an offer to purchase 120,000 components at price of $6 per unit. Impala ‘s
results for last year are as follows:
If Impala accepts the offer, it will only be able to sell 880,000 units at the regular price
due to its capacity constraints. What will Impala ‘s total operating income be next year
if it accepts the offer?
a. $2,710,000
b. $2,410,000
c. $2,650,000
d. $4,760,000
Which of the following is not a common application base for calculating the
predetermined overhead rate?
a. Administrative costs
b. Direct labor hours
c. Machine hours
d. Direct labor costs
Which of the following is an example of direct labor for Dole Food Company?
a. Truck driver who transports fruit to customers.
b. Truck driver who transports labors to field
c. Plant supervisor
d. Fruit picker
Activities that support the products or services a company provides is classified as a
a. Unit-level activity.
b. Batch-level activity.
c. Product-level activity.
d. None of these answer choices are correct..
ABC Company produces three products, Standard, Deluxe and Superior, with the
following characteristics:
The company has only 1,500 machine hours available each period. If demand exceeds
the company ‘s capacity, in what sequence should orders for the three products be filled
to maximize the company ‘s total contribution margin?
a. Standard first, Deluxe second, Superior third
b. Deluxe first, Standard second, Superior third
c. Superior first, Standard second, Deluxe third
d. Standard first, Superior second, Deluxe third
The costing systems in which all product costs for the period are accumulated and
divided evenly over all units produced during the period is referred to as
a. Job order costing system
b. Accumulation costing system
c. Departmental costing system
d. Process costing system
To help managers with their evaluations, managerial accountants often perform
a.Time tests.
b.Spot checks.
c.Variance analysis.
d.Performance reviews.
On a common-size balance sheet, notes payable is shown as a percentage of
a. Total liabilities.
b. Current liabilities.
c. Total assets.
d. Total stockholders’ equity.
Gough’s Manufacturing had underapplied overhead totaling $5,000 during the period.
To dispose of this underapplied overhead, Gough should
a. Increase the cost of goods sold by $5,000
b. Decrease the cost of goods sold by $5,000
c. Increase the work in process account by $5,000
d. Decrease the work in process account by $5,000
The interest rate used in present value calculations is called the
a. Discount rate
b. Hurdle rate
c. Compound rate
d. None of these answer choices are correct
Integrated sales budget, production budget, and purchases budget’ƒGo-Spa Enterprises
is a portable hot tub manufacturer. The company produces both 2-person and 4-person
hot tubs. John Ireland the company ‘s sales manager, prepared the following sales
forecast for 2015. The forecasted sales prices include a 5 percent increase in the
2-person spa price and a 10 percent increase in the 4-person spa price, to cover
anticipated increases in raw materials prices.
Required: a. Prepare Go-Spa ‘s sales budget for 2015.
b. On December 31, 2014, Go-Spa had 80 2-person spas in stock’”fewer than the
desired inventory level of 100, based on the following quarter ‘s sales. The company has
budgeted for sales of 450 2-person spas in the first quarter of 2016. Prepare the 2015
production budget for 2-person spas.
c. Each 2-person spa requires a pump motor, which Go-Spa purchases for $160. On
December 31, 2014, Go Spa had 400 pump motors in inventory. Damage during the
installation process results in a standard quantity of 1.2 motors per spa. Because of
recent delivery problems, Go-Spa wants to maintain an ending inventory equal to 50
percent of the following quarter ‘s production needs. Since the supplier has assured
Go-Spa that the delivery issues will be resolved by the end of December, Go-Spa wants
only 300 motors in inventory on December 31, 2015. Prepare the purchases budget for
motors for 2015.
Spikes Sports Manufacturing Company uses a job order costing system to account for
its production of specialty golf accessories. On May 31 the company reported the
following balances in its inventory accounts: $45,000 in Raw Materials, $25,000 in
Work in Process, and $15,000 in Finished Goods. On May 31, the total of all open job
order cost sheets would be
a. $45,000.
b. $25,000.
c. $70,000.
d. $85,000.
Dawn Manufacturing produces industrial light fixtures. For the year, management
estimated that total manufacturing overhead would be $1,120,000. Management
decided to use direct labor hours to apply manufacturing overhead and budgeted
144,600 direct labor hours. The following information was compiled before an
adjustment had been made to close Manufacturing Overhead Control:
For the year, manufacturing overhead was overapplied by $340,000. If Dawn prorates
the overapplied overhead, what is the ending balance of Cost of Goods Sold?
a. $2,586,686
b. $2,095,114
c. $2,577,608
d. $2,104,192
Barber Industries reported net sales of $92,000, net income of $32,000, dividends paid
to preferred stockholders of $7,000, dividends paid to common stockholders of
$10,000, average number of shares outstanding is 5,000 and average common
stockholders’ equity of $96,000. What is the return on common stockholders’ equity?
a. 26.0%
b. 33.3%
c. 88.5%
d. 95.8%
Murphy’s Manufacturing has provided the following information on a proposed project:
Required:
a. What is the payback period for the investment?
b. What is the simple rate of return on the investment?
The IMA Statement of Ethical Professional Practice includes which of the following
components?
a.Overarching principles that express members ‘ values.
b.Standards that guide members ‘ conduct.
c.Both overarching principles that express members ‘ values and standards that guide
members ‘ conduct.
d.Neither overarching principles that express members ‘ values nor standards that guide
members ‘ conduct.
Barbara’s Boutique wants to know what it takes to have $20,000 in operating income. If
her selling price is $20, variable cost is $8 and fixed costs total $40,000, how many
units must she sell to reach her goal?
a. 1,667 units
b. 2,500 units
c. 5,000 units
d. 7,500 units