1) The manager at Tom’s Taxidermy expects to sell 800 units at $30 each unit. In order
for the manager to breakeven, the manager must sell 400 units. What is the margin of
safety in dollars?
A) $12,000
B) $14,000
C) $16,000
D) $24,000
2) Selected information about The Staccato Company for the current year and prior year
is given below.
The current year’s net income percentage (as would be found on a vertical analysis of
the income statement for the current year) is
A) 11.00%.
B) 11.98%.
C) 32.74%.
D) 132.74%.
3) The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s rate of return on net sales for the current year?
A) 0.32
B) 0.10
C) 0.04
D) 0.77
4) The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to net sales revenue show?
A) Cost of goods sold as 80.67% of net sales revenue
B) A sales return of 9.16%
C) An increase of 19.00% in net sales revenue
D) Accounts receivable turnover of 8.06 times
5) Jones Ice Cream Stand is operated by Mr. Jones and experiences different sales
patterns throughout the year. To plan for the future, Mr. Jones wants to determine its
cost behavior patterns. He has the following information available about the ice cream
stand’s operating costs and the number of soft serve cones served.
Using the high-low method, the fixed costs for a month are
A) $300.
B) $2,200.
C) $500.
D) $750.
6) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to selling/general expenses?
A) There was a 5.62% decrease from prior to current year.
B) There was a 5.95% increase from prior to current year.
C) The current ratio is 1.06.
D) Selling/general expenses are 8.08% of net sales revenue.
7) Shining Springs Glass Art manufactures various glass art fixtures, including a
dolphin-glass figurine. The dolphin-glass figurine is produced in the Design
Department and it uses a glass insert that is produced also in the Production
Department. The market price for the glass insert is $900. The plant has excess capacity
and the managerial accountant reported the following information:
What is the lowest acceptable in-house transfer price to the Production Department?
What is the highest acceptable transfer price the Design Department should pay the
Production Department to produce the insert in-house?? What should the managerial
accountant understand if there was not access capacity at the plant to produce the
insert?
8) The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to net income show?
A) Both net income before tax expense and net income are 9.16% of net sales revenue.
B) There was an increase in net income of 55.71%.
C) Both net income before income tax expense and net income increased by $89,500.
D) The current ratio is 1.24.
9) The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to current liabilities show?
A) Current liabilities are 6.96% of total capital.
B) Current liabilities saw a 72.46% increase from the prior year to the current year.
C) The current ratio is 1.24.
D) Current liabilities saw a 38.00% increase from the prior year to the current year.
10) The Bedford Corporation reported the following income statement and balance
sheet amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the book value per share of common stock on the last day of the current year?
A) $8.37
B) $24.41
C) $27.11
D) $20.00