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1) Nash Corporation manufactures and sells custom snowmobiles. From the time an
order is placed till the time the snowmobile reaches the customer averages 50 days.
This 50 days is spent as follows:
What is Nash's manufacturing cycle efficiency (MCE) for its snowmobiles?
A.30.0%
B.37.5%
C.40.0%
D.60.0%
2) Eliezrie Corporation makes a product with the following standard costs:
In January the company's budgeted production was 7,400 units but the actual
production was 7,500 units. The company used 45,580 kilos of the direct material and
2,030 direct labor-hours to produce this output. During the month, the company
purchased 48,500 kilos of the direct material at a cost of $53,350. The actual direct
labor cost was $18,473 and the actual variable overhead cost was $7,714.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The materials price variance for January is:
A.$4,875 F
B.$4,875 U
C.$4,850 U
D.$4,850 F
3) Pedrotti Corporation would like to use target costing for a new product it is
considering introducing. At a selling price of $28 per unit, management projects sales of
30,000 units. The new product would require an investment of $300,000. The desired
return on investment is 17%. The target cost per unit is closest to:
A.$32.76
B.$26.30
C.$28.00
D.$30.77
4) Lake Corporation has an activity-based costing system with three activity cost
pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two
overhead accounts, equipment expense and indirect labor, are allocated to the three
activity cost pools based on resource consumption. Data used in the first stage
allocations follow:
Processing costs are assigned to products using machine-hours (MHs) and Supervising
costs are assigned to products using the number of batches. The costs in the Other
activity cost pool are not assigned to products. Activity data for the company's two
products follow:
Finally, the costs of Processing and Supervising are combined with the following sales
and direct cost data to determine product margins.
What is the overhead cost assigned to Product L2 under activity-based costing?
A.$50,000
B.$26,136
C.$12,720
D.$38,856
5) Musial Corporation has four products that use the same constrained resource. Data
concerning those products appear below:
The company does not have enough of the constrained resource to satisfy for demand of
all four products.
Required:
a. If salespersons are paid commissions that are a set percentage of sales, which product
would they prefer to sell? In other words, if it is a choice between selling one unit of
one product and one unit of another, which product would they prefer to sell?
b. From the standpoint of the entire company, if it is a choice between sales of one unit
of one product versus another, which product should the salespersons emphasize?
6) The Jenkins Division recorded operating data as follows for the past year:
For the past year, the margin used in ROI calculations was:
A.15%
B.8.33%
C.10%
D.5%
7) Moccio Enterprises, Inc., produces and sells a single product whose selling price is
$120.00 per unit and whose variable expense is $37.20 per unit. The company's
monthly fixed expense is $356,040.
Assume the company's target profit is $8,000. The dollar sales to attain that target profit
is closest to:
A.$288,800
B.$497,378
C.$481,333
D.$722,000
8) ( Naomi Corporation has a capital budgeting project that has a negative net present
value of $36,000. The life of this project is 6 years. Naomi's discount rate is 20%. By
how much would the annual cash inflows from this project have to increase in order to
have a positive net present value?
A.$1,200 or more
B.$2,412 or more
C.$6,000 or more
D.$10,824 or more
Let X be the increase in the annual cash inflows. The present value of this increase is
3.326X, which must exceed $36,000 for the investment to have a positive next present
value.
9) The following monthly data are available for the Wyatt Corporation and its only
product:
The margin of safety for the company during May was:
A.$27,000
B.$56,000
C.$6,000
D.$106,000
10) The Red River Division of Alto Company produces and sells bags of pottery clay
which can either be sold to outside customers or transferred to the White Mountain
Division of Alto Company. The following data are available for the last year:
By selling to the White Mountain Division, the Red River Division will avoid $3 per
bag in selling costs.
If Red River can sell only 10,000 bags annually to outside customers, according to the
formula in the text, what is the lowest acceptable transfer price from the viewpoint of
the selling division?
A.$20 per bag
B.$16 per bag
C.$11 per bag
D.$14 per bag
11) During October, Dorinirl Corporation incurred $60,000 of direct labor costs and
$5,000 of indirect labor costs. The journal entry to record the accrual of these wages
would include a:
A.credit to Work in Process of $60,000
B.credit to Work in Process of $65,000
C.debit to Work in Process of $65,000
D.debit to Work in Process of $60,000
12) Juett Company produces a single product. The cost of producing and selling a
single unit of this product at the company's normal activity level of 70,000 units per
month is as follows:
The normal selling price of the product is $72.90 per unit.
An order has been received from an overseas customer for 2,000 units to be delivered
this month at a special discounted price. This order would have no effect on the
company's normal sales and would not change the total amount of the company's fixed
costs. The variable selling and administrative expense would be $1.10 less per unit on
this order than on normal sales.
Direct labor is a variable cost in this company.
Required:
a. Suppose there is ample idle capacity to produce the units required by the overseas
customer and the special discounted price on the special order is $66.10 per unit. By
how much would this special order increase (decrease) the company's net operating
income for the month?
b. Suppose the company is already operating at capacity when the special order is
received from the overseas customer. What would be the opportunity cost of each unit
delivered to the overseas customer?
c. Suppose there is not enough idle capacity to produce all of the units for the overseas
customer and accepting the special order would require cutting back on production of
1,300 units for regular customers. What would be the minimum acceptable price per
unit for the special order?
13) Harrti Corporation has budgeted for the following sales:
Sales are collected as follows: 10% in the month of sale; 60% in the month following
the sale; and the remaining 30% in the second month following the sale. In Razz's
budgeted balance sheet at December 31, at what amount will accounts receivable be
shown?
A.$680,000
B.$612,000
C.$826,500
D.$214,500
14) The company's earnings per share for Year 2 is closest to:
A.$0.53 per share
B.$11.54 per share
C.$0.19 per share
D.$0.27 per share
15) In a manufacturing company, direct labor costs combined with direct materials costs
are known as:
A) period costs.
B) conversion costs.
C) prime costs.
D) opportunity costs.
16) Jimmy Corporation uses the weighted-average method in its process costing
system. The ending work in process inventory consists of 9,000 units. The ending work
in process inventory is 100% complete with respect to materials and 70% complete with
respect to labor and overhead. If the cost per equivalent unit for the period is $3.75 for
material and $1.25 for labor and overhead, what is the balance of the ending work in
process inventory account?
A.$41,625
B.$33,750
C.$45,000
D.$31,500
