1) A process with no beginning work in process, completed and transferred out 28,000
units during a period and had 12,000 units in the ending work in process that were 50%
complete. How much is equivalent units of production for the period for conversion
costs?
a.34,000 equivalent units
b.40,000 equivalent units
c.46,000 equivalent units
d.22,000 equivalent units
2) At the end of the year, any balance in the Manufacturing Overhead account is
generally eliminated by adjusting
a.Work In Process Inventory
b.Finished Goods Inventory
c.Cost of Goods Sold
d.Raw Materials Inventory
3) Which of the following is not an acceptable way of displaying the components of
other comprehensive income?
a.Combined statement of retained earnings
b.One-statement approach
c.Two-statement approach
d.All of these answer choices are correct
4) Which of the following expenses would not appear on a selling and administrative
expense budget?
a.Sales commissions
b.Depreciation
c.Property taxes
d.Indirect labor
5) The partnership agreement of Alix, Gise, and Bosco provides for the following
income ratio: (a) Alix, the managing partner, receives a salary allowance of $108,000,
(b) each partner receives 15% interest on average capital investment, and (c) remaining
net income or loss is divided equally. The average capital investments for the year were:
Alix $600,000, Gise $1,200,000, and Bosco $1,800,000. If partnership net income is
$720,000, the amount distributed to Gise should be:
a.$180,000
b.$186,000
c.$204,000
d.$240,000
6) Radio Moscow Industries purchased supplies for $1,000. They paid $400 in cash and
agreed to pay the balance in 30 days. The journal entry to record this transaction would
include a debit to an asset account for $1,000, a credit to a liability account for $600.
Which of the following would be the correct way to complete the recording of the
transaction?
a.Credit an asset account for $400
b.Credit another liability account for $400
c.Credit the Capital account for $400
d.Debit the Capital account for $400
7) Inventory is
a.reported under the classification of Property, Plant, and Equipment on the balance
sheet
b.often reported as a miscellaneous expense on the income statement
c.reported as a current asset on the balance sheet
d.generally valued at the price for which the goods can be sold
8) Dixie Company reports the following amounts for 2014 .
Net income$300,000
Average, stockholders’ equity2,000,000
Preferred dividends84,000
Par value preferred stock400,000
The 2014 rate of return on common stockholders’ equity is
a.18.8%
b.13.5%
c.15.0%
d.10.8%
9) When authorizing bonds to be issued, the board of directors does not specify the
a.total number of bonds authorized to be sold
b.contractual interest rate
c.selling price
d.total face value of the bonds
10) Mountain View, Inc. has 50,000 shares of 8%, $100 par value, noncumulative
preferred stock and 100,000 shares of $1 par value common stock outstanding at
December 31, 2014 . There were no dividends declared in 2013 . The board of directors
declares and pays a $500,000 dividend in 2014 . What is the amount of dividends
received by the common stockholders in 2014?
a.$0
b.$400,000
c.$500,000
d.$100,000
11) Bailey Company had average operating assets of $1,000,000 and sales of $500,000
in 2014. If the controllable margin was $400,000, the ROI was:
a.20%
b.35%
c.40%
d.50%
12) Selected financial statement data for Homer Company are presented below.
Net sales$1,500,000
Cost of goods sold700,000
Interest expense10,000
Net income205,000
Total assets (ending)$900,000
Total common stockholders’ equity (ending)$600,000
Total assets at the beginning of the year were $800,000; total common stockholders’
equity was $500,000 at the beginning of the period.
Instructions
Compute each of the following:
(a)Asset turnover
(b)Profit margin
(c)Return on assets
(d)Return on common stockholders’ equity
13) The following information is available for Mint Corporation:
Common Stock ($10 par)$1,500,000
Paid-in Capital in Excess of ParPreferred200,000
Paid-in Capital in Excess of Stated ValueCommon750,000
Preferred Stock450,000
Retained Earnings800,000
Treasury StockCommon50,000
Instructions
Based on the preceding information, calculate each of the following:
(a)Total paid-in capital.
(b)Total stockholders’ equity.
14) A department adds materials at the beginning of the process and incurs conversion
costs uniformly throughout the process. For the month of July, there was no beginning
work in process; 40,000 units were completed and transferred out; and there were
20,000 units in the ending work in process that were 40% complete. During July,
$96,000 materials costs and $84,000 conversion costs were charged to the department.
The unit production costs for materials and conversion costs for July was
MaterialsConversion Costs
a.$1.60$1.40
b.$1.60$1.75
c.$2.00$1.40
d.$2.40$2.13
15) If a company sells its accounts receivables to a factor,
a.the seller pays a commission to the factor
b.the factor pays a commission to the seller
c.there is a gain on the sale of the receivables
d.the seller defers recognition of sales revenue until the account is collected
16) Manufacturing costs are typically classified as:
a.product costs or period costs
b.direct materials or direct labor
c.direct materials, direct labor, or selling and administrative
d.direct materials, direct labor, or manufacturing overhead
17) In the Buans Company, land decreased $80,000 because of a cash sale for $80,000,
the equipment account increased $35,000 as a result of a cash purchase, and Bonds
Payable increased $60,000 from an issuance for cash at face value. The net cash
provided by investing activities is
a.$80,000
b.$165,000
c.$45,000
d.$25,000
18) An entry in the “Other Accounts” column in a cash receipts journal could occur
when the credit is to
a.Owner’s Drawings
b.Accounts Payable
c.Owner’s Capital
d.Inventory
19) The following data is available for Santos Service Corporation at December 31,
2014:
Common stock, par $10 (authorized 100,000 shares)$400,000
Treasury Stock (at cost $15 per share)$ 27,000
Based on the data, how many shares of common stock have been issued?
a.50,000
b.40,000
c.49,880
d.38,200
20) Factory labor costs
a.are accumulated in a control account
b.do not include pension costs
c.include vacation pay
d.are based on workers net pay
21) CASH PAYMENTS JOURNALPage 45
OtherAccounts
Ck.AccountPost.AccountsPayableInventoryCash
DateNo.DebitedRef.Dr.Dr.Cr.Cr.
20
Jan.4659N. Barger(a)4,000403,960
11660Prepaid Rent(b)1,0001,000
13661Inventory(c)565565
14662Owners Drawings(d)2,0002,000
18663Yount(e)1,3001,300
20664Inventory(f)450450
29665Equipment(g)3,4003,400
7,4155,3004012,675
(h)(i)(j)(k)
Using the cash payments journal above, identify each of the posting references
indicated by a letter, as representing:
(1)a posting to a general ledger account.
(2)a posting to a subsidiary ledger account.
(3)that no posting is required.
22) Cost allocation of an intangible asset is referred to as
a.amortization
b.depletion
c.accretion
d.capitalization
23) Cost of goods manufactured equals $67,000 for 2014 . Finished goods inventory is
$5,500 at the beginning of the year and $2,000 at the end of the year. Beginning and
ending work in process for 2014 are $5,000 and $4,000, respectively. How much is cost
of goods sold for the year?
a.$72,500
b.$69,000
c.$63,500
d.$70,500
24) Manor Manufacturing has recently tried to improve its analysis for its
manufacturing process. Units started into production equaled 18,000 and ending work
in process equaled 1,200 units. Mayer had no beginning work in process inventory.
Conversion costs are applied equally throughout production, and materials are applied
at the beginning of the process. How much is the materials cost per unit if ending work
in process was 25% complete and total materials costs equaled $90,000?
a.$5.00
b.$5.27
c.$20.00
d.$4.69
25) Liabilities are generally classified on a balance sheet as
a.small liabilities and large liabilities
b.present liabilities and future liabilities
c.tangible liabilities and intangible liabilities
d.current liabilities and long-term liabilities
26) Jenner Company had the following transactions pertaining to its short-term stock
investments.
Jan.1Purchased 600 shares of Pork Company stock for $8,420.
June1Received cash dividends of $0.60 per share on the Pork Company stock.
Sept.15Sold 300 shares of the Pork Company stock for $3,400 Cash.
Instructions
Journalize the transactions.
27) Under the direct method, the two largest classes of items in the operating activities
section for a merchandising company are cash ________________________ and cash
_________________________.
28) In October, Fink Inc. reports 42,000 actual direct labor hours, and it incurs
$196,000 of manufacturing overhead costs. Standard hours allowed for the work done
is 40,000 hours. Finks predetermined overhead rate is $5.00 per direct labor hour. In
addition, the flexible manufacturing overhead budget shows that budgeted costs are
$3.80 variable per direct labor hour and $60,000 fixed. Normal capacity was 50,000
direct labor hours.
Instructions
Compute the manufacturing overhead volume variance.
29) When there is a ________________ difference between the straight-line and
effective-interest methods of amortization, the ________________ method is required
under GAAP.
30) A common set of standards that provides guidelines to accountants and indicates
how to report economic events is called _________________.
31) The manufacturing operations of Lane, Inc. had the following balances for the
month of January:
InventoriesJanuary 1January 31
Raw materials$12,000$15,000
Work in process21,00024,000
Finished goods15,00018,000
Lane transferred $275,000 of completed goods out of work in process during January.
Instructions
Compute the cost of goods sold.
Legal/Regulatory Perspective,
32) The following information is available for Richmond Hill Corporation:
Beginning common stockholders’ equity$700,000
Dividends paid to common stockholders50,000
Dividends paid to preferred stockholders30,000
Ending common stockholders’ equity1,000,000
Net income200,000
Instructions
Based on the preceding information, calculate return on common stockholders’ equity.
33) For each item listed below, indicate in the space to the left whether the item would
be considered a product cost or a period cost for a manufacturing company. Use the
following code:
Pr=Product cost
Pe=Period cost
____1>Factory supervisory salaries
____2>Sales commissions
____3>Income tax expense
____4>Indirect materials used
____5>Indirect labor
____6>Office salaries expense
____7>Property taxes on factory building
____8>Sales manager’s salary
____9>Factory wages expense
____10>Direct materials used
34) Zumfoll Inc., which produces a single product, has prepared the following standard
cost sheet for one unit of the product.
Direct materials (6 pounds at $2 per pound)$12
Direct labor (2 hours at $12 per hour)$24
During the month of April, the company manufactures 300 units and incurs the
following actual costs.
Direct materials purchased and used (1,850 pounds)$4,070
Direct labor (620 hours)$7,130
Instructions
Compute the total, price, and quantity variances for materials and labor.
35) Webster Manufacturing uses a flexible budget for manufacturing overhead based on
machine hours. Variable manufacturing overhead costs per machine hour are as follows:
Indirect labor$5.00
Indirect materials2.50
Maintenance.50
Utilities.30
Fixed overhead costs per month are:
Supervision$1,200
Insurance400
Property taxes600
Depreciation1,800
The company believes it will normally operate in a range of 4,000 to 8,000 machine
hours per month. During the month of August, 2014, the company incurs the following
manufacturing overhead costs:
Indirect labor$28,000
Indirect materials16,200
Maintenance2,800
Utilities1,700
Supervision1,440
Insurance400
Property taxes600
Depreciation1,860
Instructions
Prepare a flexible budget report, assuming that the company used 6,000 machine hours
during August.