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1) castil corporation makes and sells a product called a miniwarp. one miniwarp
requires 2.5 kilograms of the raw material jurislon. budgeted production of miniwarps
for the next five months is as follows:
the company wants to maintain monthly ending inventories of jurislon equal to 20% of
the following month's production needs. on july 31, this requirement was not met since
only 9,700 kilograms of jurislon were on hand. the cost of jurislon is $5.00 per
kilogram. the company wants to prepare a direct materials purchase budget for the next
five months.
the total cost of jurislon to be purchased in august is:
a.$302,250
b.$451,500
c.$250,000
d.$253,750
2) the following data (in thousands of dollars) have been taken from the accounting
records of karlana corporation for the just completed year.
the net operating income for the year (in thousands of dollars) was:
a.$410
b.$110
c.$40
d.$180
3) managers sometimes do not act in ways that are in the best interests of the overall
company. what is the term for this?
a.strategic approach
b.suboptimization
c.optimal motivation
d.responsibility accounting
4) return on investment (roi) is equal to the margin multiplied by:
a.sales
b.turnover
c.average operating assets
d.residual income
5) stoudmire corporation uses an activity-based costing system with three activity cost
pools. the company has provided the following data concerning its costs:
how much cost, in total, would be allocated in the first-stage allocation to the order
processing activity cost pool?
a.$462,000
b.$407,000
c.$396,000
d.$431,000
6) at an activity level of 9,600 machine-hours in a month, montgomery corporation's
total variable production engineering cost is $402,336 and its total fixed production
engineering cost is $570,240. what would be the total production engineering cost, both
fixed and variable, at an activity level of 9,900 machine-hours in a month? assume that
this level of activity is within the relevant range.
a.$101.31
b.$99.51
c.$98.24
d.$99.78
7) mccaughey corporation's most recent balance sheet and income statement appear
below:
the average collection period for year 2 is closest to:
a.1.2 days
b.0.9 days
c.40.9 days
d.37.9 days
8) a manufacturing company uses a standard costing system in which standard
machine-hours (mhs) is the measure of activity. data from the company's flexible
budget for manufacturing overhead are given below:
the following data pertain to operations for the most recent period:
what was the fixed manufacturing overhead volume variance for the period to the
nearest dollar?
a.$1,174 f
b.$1,194 f
c.$1,550 f
d.$357 u
9) the payback method measures:
a.how quickly investment dollars may be recovered
b.the cash flow from an investment
c.the economic life of an investment
d.the project profitability of an investment
10) the upton company uses a standard costing system in which variable overhead is
assigned to production on the basis of standard direct labor-hours. data for the month of
february include the following:
variable overhead cost incurred: $48,700
total variable overhead variance: $300 f
standard hours allowed for actual production: 7,000
actual direct labor-hours worked: 6,840
the variable overhead efficiency variance is:
a.$430 u
b.$740 f
c.$1,120 f
d.$950 u
11) jb lumber corporation is downsizing operations and has to decide which of its large
saws should be sold. jb currently has four saws but only needs to keep three. all four
saws have a remaining useful life of 3 years and will all have a salvage value of zero at
the end of those 3 years. also, all four saws have equal annual operating costs and
output efficiency. information related to the four saws is provided below:
in order to maximize profits for the next three years, which machine would be most
beneficial for jb to sell?
a.1
b.2
c.3
d.4
12) hutchings corporation's net cash provided by operating activities was $124; its
capital expenditures were $54; and its cash dividends were $33. the company's free cash
flow was:
a.$70
b.$91
c.$211
d.$37
13) walp corporation's most recent balance sheet and income statement appear below:
dividends on common stock during year 2 totaled $20 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$7.75 per share.
required:
compute the following for year 2:
a. gross margin percentage.
b. earnings per share (of common stock).
c. price-earnings ratio.
d. dividend payout ratio.
e. dividend yield ratio.
f. return on total assets.
g. return on common stockholders' equity.
h. book value per share.
14) kleffman corporation is presently making part x31 that is used in one of its
products. a total of 2,000 units of this part are produced and used every year. the
company's accounting department reports the following costs of producing the part at
this level of activity:
an outside supplier has offered to produce and sell the part to the company for $23.40
each. if this offer is accepted, the supervisor's salary and all of the variable costs,
including direct labor, can be avoided. the special equipment used to make the part was
purchased many years ago and has no salvage value or other use. the allocated general
overhead represents fixed costs of the entire company. if the outside supplier's offer
were accepted, only $1,000 of these allocated general overhead costs would be avoided.
in addition to the facts given above, assume that the space used to produce part x31
could be used to make more of one of the company's other products, generating an
additional segment margin of $23,000 per year for that product. what would be the
impact on the company's overall net operating income of buying part x31 from the
outside supplier and using the freed space to make more of the other product?
a.net operating income would increase by $17,400 per year
b.net operating income would increase by $21,200 per year
c.net operating income would decline by $28,600 per year
d.net operating income would increase by $23,000 per year
15) the standards that allow for no machine breakdowns or other work interruptions and
that require peak efficiency at all times are referred to as:
a.normal standards
b.practical standards
c.ideal standards
d.budgeted standards
16) the watts company uses predetermined overhead rates to apply manufacturing
overhead to jobs. the predetermined overhead rate is based on labor cost in dept. a and
on machine-hours in dept. b. at the beginning of the year, the company made the
following estimates:
what predetermined overhead rates would be used in dept a and dept b, respectively?
a.50% and $8.00
b.50% and $5.00
c.$15 and 110%
d.200% and $5.00
17) lesmerises corporation's most recent balance sheet and income statement appear
below:
dividends on common stock during year 2 totaled $40 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$2.85 per share.
the price-earnings ratio for year 2 is closest to:
a.5.70
b.8.14
c.4.13
d.9.50
18) data for september for mossman corporation and its two major business segments,
north and south, appear below:
in addition, common fixed expenses totaled $319,000 and were allocated as follows:
$160,000 to the north business segment and $159,000 to the south business segment.
a properly constructed segmented income statement in a contribution format would
show that the segment margin of the north business segment is:
a.$211,000
b.$51,000
c.$259,000
d.$121,000
19) a manufacturing company that produces a single product has provided the following
data concerning its most recent month of operations:
what is the total period cost for the month under absorption costing?
a.$48,000
b.$275,100
c.$86,400
d.$188,700
20) carner lumber sells lumber and general building supplies to building contractors in a
medium-sized town in montana. data regarding the store's operations follow:
sales are budgeted at $370,000 for november, $360,000 for december, and $340,000 for
january.
collections are expected to be 85% in the month of sale, 13% in the month following
the sale, and 2% uncollectible.
the cost of goods sold is 70% of sales.
the company purchases 30% of its merchandise in the month prior to the month of sale
and 70% 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 $24,600.
monthly depreciation is $17,000.
ignore taxes.
the cash balance at the end of december would be:
a.$91,600
b.$205,500
c.$186,500
d.$19,000
