1) rank the following methods of assigning overhead costs from least accurate to most
accurate.
a.departmental rates, plantwide rate, activity-based costing
b.plantwide rate, departmental rates, activity-based costing
c.plantwide rate, activity-based costing, departmental rates
d.activity-based costing, departmental rates, plantwide rate
e.activity-based costing, plantwide rate, departmental rates
2) langin corporation has provided its contribution format income statement for june.
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 14% increase in sales.
3) dewberry midwifery’s cost formula for its wages and salaries is $1,960 per month
plus $429 per birth. for the month of december, the company planned for activity of 128
births, but the actual level of activity was 130 births. the actual wages and salaries for
the month was $56,020. the wages and salaries in the flexible budget for december
would be closest to:
a.$57,761
b.$57,730
c.$56,020
d.$56,872
4) wriphoff company uses a standard cost system to collect costs related to the
production of its clay bud vases. manufacturing overhead at wriphoff is applied to
production on the basis of standard direct labor-hours. the overhead standards used at
wriphoff are as follows:
the standards above were based on an expected annual volume of 40,000 bud vases or
36,000 direct labor-hours. the actual results for last year were as follows:
what was wriphoff’s variable overhead rate variance for last year?
a.$6,850 favorable
b.$7,294 unfavorable
c.$14,144 unfavorable
d.$15,070 unfavorable
5) kimbeth manufacturing makes dust density sensors (dds), a safety device for the
mining industry. the company uses a process costing system and has only a single
processing department. the following information pertains to operations for the month
of may:
the beginning work in process inventory was 60% complete with respect to materials
and 20% complete with respect to conversion costs. the ending work in process
inventory was 90% complete with respect to materials and 40% complete with respect
to conversion costs. the costs were as follows:
using the fifo method, the total cost of units in the ending work in process inventory is
closest to:
a.$153,200
b.$154,800
c.$155,300
d.$157,000
6) lapinsky air uses two measures of activity, flights and passengers, in the cost
formulas in its budgets and performance reports. the cost formula for plane operating
costs is $31,400 per month plus $2,148 per flight plus $7 per passenger. the company
expected its activity in april to be 89 flights and 261 passengers, but the actual activity
was 84 flights and 260 passengers. the actual cost for plane operating costs in april was
$204,810. the spending variance for plane operating costs in april would be closest to:
a.$8,842 u
b.$19,589 f
c.$19,589 u
d.$8,842 f
7) dasilva company had only one job in process on may 1. the job had been charged
with $1,400 of direct materials, $6,192 of direct labor, and $5,712 of manufacturing
overhead cost. the company assigns overhead cost to jobs using the predetermined
overhead rate of $11.90 per direct labor-hour. during may, the following activity was
recorded:
work in process inventory on may 30 contains $4,773 of direct labor cost. raw materials
consist solely of items that are classified as direct materials.
the cost of goods manufactured for may was:
a.$98,920
b.$92,688
c.$120,800
d.$97,310
8) which of the following would a manufacturing company expect to experience as it
automates and shifts from variable expenses to fixed expenses?
a.a lower margin of safety percentage
b.a higher contribution margin ratio
c.a steeper total expenses line on its cost-volume-profit graph
d.both a and b above
9)
shull 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
$9.80 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.
i. working capital.
j. current ratio.
k. acid-test ratio.
l. accounts receivable turnover.
m. average collection period.
n. inventory turnover.
o. average sale period.
p. times interest earned.
q. debt-to-equity ratio.
10) burget clinic uses client-visits as its measure of activity. during july, the clinic
budgeted for 2,100 client-visits, but its actual level of activity was 2,110 client-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for july:
the spending variance for occupancy expenses in july would be closest to:
a.$265 f
b.$280 u
c.$280 f
d.$265 u
11) the clark company makes a single product and uses standard costing. some data
concerning this product for the month of may follow:
the total standard cost for variable overhead for may was closest to:
a.$56,000
b.$40,000
c.$60,000
d.$50,000
12) what is the company’s margin of safety in dollars?
a.$400,000
b.$600,000
c.$120,000
d.$880,000
13) palczewski corporation manufactures and sells a single product. the company uses
units as the measure of activity in its budgets and performance reports. during
december, the company budgeted for 5,000 units, but its actual level of activity was
4,980 units. the company has provided the following data concerning the formulas to be
used in its budgeting:
the activity variance for direct labor in december would be closest to:
a.$180 u
b.$70 f
c.$70 u
d.$180 f
14) dearman company, which has only one product, has provided the following data
concerning its most recent month of operations:
what is the total period cost for the month under the absorption costing approach?
a.$33,600
b.$65,100
c.$129,500
d.$64,400
15) braston corporation is a small wholesaler of gourmet food products. data regarding
the store’s operations follow:
sales are budgeted at $350,000 for november, $330,000 for december, and $340,000 for
january.
collections are expected to be 70% in the month of sale, 26% in the month following
the sale, and 4% uncollectible.
the cost of goods sold is 70% 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 $20,100.
monthly depreciation is $22,000.
ignore taxes.
the cost of december merchandise purchases would be:
a.$231,000
b.$119,000
c.$245,000
d.$234,500
16) a manufacturer of tiling grout has supplied the following data:
the company’s contribution margin ratio is closest to:
a.28.9%
b.63.9%
c.71.1%
d.36.1%