1) the consumer products division of garafalo corporation had average operating assets
of $300,000 and net operating income of $46,900 in march. the minimum required rate
of return for performance evaluation purposes is 16%.
what was the consumer products division’s residual income in march?
a.$7,504
b.$1,100
c.-$7,504
d.-$1,100
2) hanson corporation uses the weighted-average method in its process costing system.
data concerning the first processing department for the most recent month are listed
below:
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 total cost transferred from the first processing department to the next processing
department during the month is closest to:
a.$447,600
b.$450,800
c.$423,316
d.$464,953
3) naser corporation’s total current assets are $390,000, its noncurrent assets are
$500,000, its total current liabilities are $330,000, its long-term liabilities are $370,000,
and its stockholders’ equity is $190,000. working capital is:
a.$130,000
b.$60,000
c.$190,000
d.$390,000
4) janz painting paints the interiors and exteriors of homes and commercial buildings.
the company uses an activity-based costing system for its overhead costs. the company
has provided the following data concerning its activity-based costing system.
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
the company has already finished the first stage of the allocation process in which costs
were allocated to the activity cost centers. the results are listed below:
required:
a. compute the activity rates (i.e., cost per unit of activity) for the painting and job
support activity cost pools by filling in the table below. round off all calculations to the
nearest whole cent.
b. prepare an action analysis report in good form of a job that involves painting 54
square meters and has direct materials and direct labor cost of $1,380. the sales revenue
from this job is $1,300.
for purposes of this action analysis report, direct materials and direct labor should be
classified as a green cost; painting overhead as a red cost; and office expense as a
yellow cost.
5) baugus corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during august, the
company budgeted for 6,900 units, but its actual level of activity was 6,950 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for august:
the direct labor in the planning budget for august would be closest to:
a.$27,760
b.$29,190
c.$27,560
d.$28,980
6) lagace corporation uses the absorption costing approach to cost-plus pricing
described in the text to set prices for its products. based on budgeted sales of 20,000
units next year, the unit product cost of a particular product is $81.60. the company’s
selling and administrative expenses for this product are budgeted to be $354,000 in total
for the year. the company has invested $260,000 in this product and expects a return on
investment of 13%.
the markup on absorption cost for this product would be closest to:
a.34.7%
b.23.8%
c.13.0%
d.21.7%
7) guadalupe manufacturing company uses a standard cost system with direct
labor-hours as the activity base for overhead. last year, guadalupe applied a total of
$936,000 of fixed manufacturing overhead cost to the products it produced. the
following data relate to production for the year:
what was guadalupe’s fixed manufacturing overhead volume variance?
a.$23,400 favorable
b.$62,400 unfavorable
c.$37,440 unfavorable
d.$58,500 favorable
8) the ferris company applies manufacturing overhead costs to products on the basis of
standard direct labor-hours. the standard cost card shows that 3 direct labor-hours are
required per unit of product. for august, the company budgeted to work 90,000 direct
labor-hours and to incur the following total manufacturing overhead costs:
during august, the company completed 28,000 units of product, worked 86,000 direct
labor-hours, and incurred the following total manufacturing overhead costs:
the denominator activity in the predetermined overhead rate is 90,000 direct
labor-hours.
for august, the variable overhead rate variance is:
a.$4,300 f
b.$4,300 u
c.$6,500 f
d.$6,500 u
9) blackwelder snow removal’s cost formula for its vehicle operating cost is $1,240 per
month plus $348 per snow-day. for the month of december, the company planned for
activity of 12 snow-days, but the actual level of activity was 14 snow-days. the actual
vehicle operating cost for the month was $6,330. the vehicle operating cost in the
planning budget for december would be closest to:
a.$5,426
b.$6,112
c.$5,416
d.$6,330
10) demirjian inc. is considering an investment project that would require an initial
investment of $290,000 and that would last for 8 years. the annual cash receipts from
the project would be $189,000 and the annual cash expenses would be $85,000. the
equipment used in the project could be sold at the end of the project for a salvage value
of $29,000. the company’s tax rate is 30%. for tax purposes, the entire initial investment
will be depreciated over 7 years without any reduction for salvage value. the company
uses a discount rate of 13%.
the net present value of the project is closest to:
a.$121,972
b.$114,339
c.$59,367
d.$67,000
11) speir corporation’s contribution format income statement for the most recent month
follows:
required:
a. compute the degree of operating leverage to two decimal places.
b. using the degree of operating leverage, estimate the percentage change in net
operating income that should result from a 3% increase in sales.
12) noda corporation uses the fifo method in its process costing system. data concerning
the first processing department for the most recent month are listed below:
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 per equivalent unit for conversion costs for the first department for the month is
closest to:
a.$30.56
b.$27.92
c.$28.44
d.$27.09
13) mattern corporation applies manufacturing overhead to products on the basis of
standard machine-hours. budgeted and actual fixed manufacturing overhead costs for
the most recent month appear below:
the company based its original budget on 6,100 machine-hours. the company actually
worked 5,710 machine-hours during the month. the standard hours allowed for the
actual output of the month totaled 5,540 machine-hours. what was the overall fixed
manufacturing overhead volume variance for the month?
a.$4,836 unfavorable
b.$4,836 favorable
c.$6,944 unfavorable
d.$6,944 favorable
14) hardey corporation’s balance sheet and income statement appear below:
cash dividends were $8. the company sold equipment for $13 that was originally
purchased for $8 and that had accumulated depreciation of $8.
the net cash provided by (used by) financing activities for the year was:
a.$16
b.$3
c.$11
d.($8)
15) during august, sherill corporation incurred $78,000 of actual manufacturing
overhead costs. during the same period, the manufacturing overhead applied to work in
process was $81,000.
the cost of direct materials used is:
a.$20,000
b.$11,000
c.$12,000
d.$15,000