1) The income tax expense in year 3 is:
A.$28,000
B.$10,500
C.$7,000
D.$17,500
2) The Gomez Corporation is considering two projects, T and V. The following
information has been gathered on these projects:
Based on this information, which of the following statements is (are) true?
I. Project T has the highest ranking according to the project profitability index criterion.
II. Project V has the highest ranking according to the net present value criterion.
A.Only I
B.Only II
C.Both I and II
D.Neither I nor II
3) Moyer Corporation is a specialty component manufacturer with idle capacity.
Management would like to use its extra capacity to generate additional profits. A
potential customer has offered to buy 2,300 units of component TIB. Each unit of TIB
requires 9 units of material F58 and 7 units of material D66. Data concerning these two
materials follow:
Material F58 is in use in many of the company’s products and is routinely replenished.
Material D66 is no longer used by the company in any of its normal products and
existing stocks would not be replenished once they are used up.
What would be the relevant cost of the materials, in total, for purposes of determining a
minimum acceptable price for the order for product TIB?
A) $189,890
B) $174,215
C) $168,533
D) $200,905
4) Opportunity costs are:
A.not used for decision making.
B.the same as variable costs.
C.the same as historical costs.
D.relevant in decision making.
5) Hibshman Corporation bases its predetermined overhead rate on the estimated
machine-hours for the upcoming year. At the beginning of the most recently completed
year, the Corporation estimated the machine-hours for the upcoming year at 10,000
machine-hours. The estimated variable manufacturing overhead was $6.82 per
machine-hour and the estimated total fixed manufacturing overhead was $230,200. The
predetermined overhead rate for the recently completed year was closest to:
A.$29.84 per machine-hour
B.$23.15 per machine-hour
C.$23.02 per machine-hour
D.$6.82 per machine-hour
6) Schulenburg Corporation has provided the following data from its activity-based
costing accounting system:
Distribution of Resource Consumption across Activity Cost Pools:
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
Required:
a. Determine the total amount of indirect factory wages and factory equipment
depreciation costs that would be allocated to the Product Processing activity cost pool.
Show your work!
b. Determine the total amount of indirect factory wages and factory equipment
depreciation costs that would NOT be assigned to products. Show your work!
7) The current ratio at the end of Year 2 is closest to:
A.0.38
B.2.17
C.0.94
D.0.40
8) Anders Corporation has two service departments and two operating departments. The
costs of the Personnel Department are allocated to other departments on the basis of the
number of employees in the departments. Departments and number of employees are as
follows:
Costs in the Personnel Department total $882,000 per year.
Suppose the company uses the step-down method and Personnel Department costs are
allocated first. The amount of this cost allocated to the Engineering Department would
be:
A.$70,560
B.$0
C.$72,000
D.$78,400
9) Wilson Company maintains a cafeteria for its employees. For June, variable food
costs were budgeted at $18 per employee based on a budgeted level of 1,000 employees
in other departments. During the month, an average of 950 employees worked in other
departments and actual food costs totaled $16,150. How much food cost should be
charged to other departments at the end of the month?
A.$16,150
B.$17,000
C.$17,100
D.$18,000
10) The following information was obtained from the records of the first processing
department of Bapst Corporation for the month of May. The company uses the FIFO
method in its process costing system.
All materials are added at the beginning of the manufacturing process.
The equivalent units for labor and overhead for the month is:
A.17,600 units
B.18,500 units
C.19,700 units
D.21,600 units
11) Daab Products is a division of a major corporation. The following data are for the
most recent year of operations:
The division’s return on investment (ROI) is closest to:
A.10.8%
B.41.5%
C.0.3%
D.2.2%
12) Pohl Corporation uses a standard cost system in which manufacturing overhead is
applied on the basis of standard machine-hours. For June, the company’s manufacturing
overhead flexible budget showed the following total budgeted costs at a denominator
activity level of 20,000 machine-hours:
During June, 17,000 machine-hours were used to complete 13,000 units of product, and
the following actual total overhead costs were incurred:
At standard, each unit of finished product requires 1.4 hours of machine time.
The variable overhead efficiency variance for utilities cost for June was
A.$400 F
B.$400 U
C.$600 F
D.$600 U
13) Shaw Supply Company sells a single product and has the following average costs at
a sales level of 15,000 units:
Required:
Determine the following amounts at a sales level of 18,000 units:
a. Total variable cost
b. Total fixed cost
c. Variable cost per unit
d. Fixed cost per unit
e. Total cost per unit
14) CR Corporation has the following estimated costs for the next year:
CR Corporation estimates that 20,000 labor-hours will be worked during the year. If
overhead is applied on the basis of direct labor-hours, the overhead rate per hour will
be:
A.$2.25
B.$3.25
C.$3.45
D.$4.70