1) genito corporation’s static planning budget for october appears below. the company
bases its budgets on machine-hours.
in october, the actual number of machine-hours was 8,800, the actual supplies cost was
$69,450, the actual power cost was $34,190, the actual salaries cost was $86,490, and
the actual equipment depreciation was $37,600.
the spending variance for equipment depreciation in the flexible budget performance
report for the month should be:
a.$200 u
b.$1,120 f
c.$200 f
d.$1,120 u
2) hobbins corporation makes three products that use compound w, the current
constrained resource. data concerning those products appear below:
rank the products in order of their current profitability from most profitable to least
profitable. in other words, rank the products in the order in which they should be
emphasized.
a.ut,rc,dq
b.dq,rc,ut
c.rc,dq,ut
d.ut,dq,rc
3) kassebaum corporation’s comparative balance sheet appears below:
the company’s net income (loss) for the year was $13,000 and its cash dividends were
$1,000.
the total dollar amount of all of the items that would be classified as sources when
compiling a simplified statement of cash flows is:
a.$6,000
b.$35,000
c.$36,000
d.$42,000
4) eccles corporation uses a job-order costing system and applies overhead to jobs using
a predetermined overhead rate. during the year the company’s finished goods inventory
account was debited for $384,000 and credited for $325,900. the ending balance in the
finished goods inventory account was $72,100. at the end of the year, manufacturing
overhead was underapplied by $5,400.
the work in process inventory at the end of august after allocation of any underapplied
or overapplied overhead for the month is closest to:
a.$18,593
b.$18,780
c.$17,080
d.$17,267
5) the adams company, a merchandising firm, has budgeted its activity for november
according to the following information:
sales at $450,000, all for cash
merchandise inventory on october 31 was $200,000.
the cash balance november 1 was $18,000.
selling and administrative expenses are budgeted at $60,000 for november and are paid
for in cash.
budgeted depreciation for november is $25,000.
the planned merchandise inventory on november 30 is $230,000.
the cost of goods sold is 70% of the selling price.
all purchases are paid for in cash.
the budgeted cash disbursements for november are:
a.$345,000
b.$375,000
c.$530,000
d.$405,000
6) harrison company, a retailer, had cost of goods sold of $180,000 last year. the
beginning inventory balance was $26,000 and the ending inventory balance was
$24,000. the company’s inventory turnover was closest to:
a.7.20
b.6.92
c.3.60
d.7.50
7) dilom farm supply is located in a small town in the rural west. data regarding the
store’s operations follow:
sales are budgeted at $260,000 for november, $230,000 for december, and $210,000 for
january.
collections are expected to be 55% in the month of sale, 40% in the month following
the sale, and 5% uncollectible.
the cost of goods sold is 80% of sales.
the company purchases 50% of its merchandise in the month prior to the month of sale
and 50% in the month of sale. payment for merchandise is made in the month following
the purchase.
other monthly expenses to be paid in cash are $21,700.
monthly depreciation is $17,000.
ignore taxes.
retained earnings at the end of december would be:
a.$342,000
b.$362,600
c.$337,800
d.$338,100
8) chabud corporation uses the weighted-average method in its process costing system.
this month, the beginning inventory in the first processing department consisted of 500
units. the costs and percentage completion of these units in beginning inventory were:
a total of 8,100 units were started and 7,300 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 70% complete with respect to materials and 40% 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.
how many units are in ending work in process inventory in the first processing
department at the end of the month?
a.7,600
b.800
c.1,300
d.900
9) komlos corporation has two operating divisions-an east division and a west division.
the company’s logistics department services both divisions. the variable costs of the
logistics department are budgeted at $48 per shipment. the logistics department’s fixed
costs are budgeted at $253,000 for the year. the fixed costs of the logistics department
are determined based on peak-period demand.
at the end of the year, actual logistics department variable costs totaled $360,620 and
fixed costs totaled $267,210. the east division had a total of 4,200 shipments and the
west division had a total of 3,100 shipments for the year.
how much actual logistics department cost should not be allocated to the operating
divisions at the end of the year?
a.$10,220
b.$24,430
c.$0
d.$14,210
10) data concerning sotero corporation’s single product appear below:
the company is currently selling 5,000 units per month. fixed expenses are $319,000 per
month. consider each of the following questions independently.
this question is to be considered independently of all other questions relating to sotero
corporation. refer to the original data when answering this question.
the marketing manager would like to cut the selling price by $7 and increase the
advertising budget by $20,000 per month. the marketing manager predicts that these
two changes would increase monthly sales by 500 units. what should be the overall
effect on the company’s monthly net operating income of this change?
a.increase of $46,500
b.decrease of $18,500
c.decrease of $16,500
d.increase of $18,500
11) crystal company produces a single product. the company’s variable costing income
statement for the month of may appears below:
the company produced 80,000 units in may and the beginning inventory consisted of
25,000 units. variable production costs per unit and total fixed costs have remained
constant over the past several months.
under absorption costing, for the month ended may 31, the company would report a:
a.$30,000 loss
b.$0 profit
c.$30,000 profit
d.$60,000 profit
12) 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 capacity, the predetermined
overhead rate is closest to:
a.$32.45
b.$27.50
c.$30.44
d.$30.38
13) the times interest earned for year 2 is closest to:
a.5.29
b.2.70
c.1.89
d.3.70
14) knell corporation sells a product for $230 per unit. the product’s current sales are
33,000 units and its break-even sales are 26,400 units. the margin of safety as a
percentage of sales is closest to:
a.25%
b.75%
c.20%
d.80%
15) excerpts from stys corporation’s most recent balance sheet and income statement
appear below:
dividends on common stock during year 2 totaled $50 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$8.20 per share.
the dividend yield ratio for year 2 is closest to:
a.6.10%
b.83.33%
c.7.32%
d.1.22%
16) lippincott corporation uses an activity-based costing system with the following
three activity cost pools:
the other activity cost pool is used to accumulate costs of idle capacity and
organization-sustaining costs.
the company has provided the following data concerning its costs:
the distribution of resource consumption across activity cost pools is given below:
the activity rate for the order processing activity cost pool is closest to:
a.$1,050 per order
b.$1,680 per order
c.$1,190 per order
d.$1,350 per order
17) miller company manufactures a product for which materials are added at the
beginning of the manufacturing process. a review of the company’s inventory and cost
records for the most recently completed year revealed the following information:
the company uses the weighted-average cost method in its process costing system. the
ending inventory is 50% complete with respect to conversion costs.
required:
a. compute the equivalent units of production and the cost per equivalent units for
materials and for conversion costs.
b. determine the cost transferred to finished goods.
c. determine the amount of cost that should be assigned to the ending work in process
inventory.
18) testing a prototype of a new product is an example of a:
a.unit-level activity
b.batch-level activity
c.product-level activity
d.organization-sustaining activity
19) ilford company, which has only one product, has provided the following data
concerning its most recent month of operations:
what is the net operating income for the month under variable costing?
a.$1,200
b.$5,700
c.$6,900
d.$(18,000)
20) lee company produces a single product. at the end of last year, the company had
30,000 units in its ending inventory. lee’s variable production costs are $10 per unit and
its fixed manufacturing overhead costs are $5 per unit every year. the company’s net
operating income for the year was $12,000 higher under variable costing than under
absorption costing. given these facts, the number of units of product in inventory at the
beginning of the year must have been:
a.28,800 units
b.27,600 units
c.32,400 units
d.42,000 units