The following information pertains to Diane Company. Assume that all balance sheet
amounts represent both average and ending balance figures and that all sales were on
credit.
Assets
Liabilities and Stockholders’ Equity
Income Statement
What is the dividend yield for Diane Company?
a. 7.5%
b. 0.75%
c. 13.3%
d. 1.3%
Once equivalent units are calculated for materials, this number will also be used for
direct labor and factory overhead.
a. True
b. False
Division A reported income from operations of $975,000 and total service department
charges of $675,000. As a result,
a. net income was $300,000
b. the gross profit margin was $300,000
c. income from operations before service department charges was $1,650,000
d. consolidated net income was $300,000
The journal entry to record the purchase of $45,000 of raw materials is
a. Materials Accounts Receivable 45,000
45,000
b. Materials Accounts Payable 45,000
45,000
c. Inventory Accounts Receivable 45,000
30,000
d. Inventory Cash 45,000
45,000
In a lean system, the work in process and raw materials inventory accounts are
combined.
a. True
b. False
Sifton Electronics Corporation manufactures and assembles electronic motor drives for
video cameras. The company assembles the motor drives for several accounts. The
process consists of a lean cell for each customer. The following information relates only
to one customer’s lean cell for the coming year. Projected labor and overhead,
$7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to
produce 27,500 motor drives. Actual production for August was 1,600 units, and motor
drives shipped amounted to 1,380 units.
From the foregoing information, determine the production costs transferred to Cost of
Goods Sold during August. ‘˜
a. $369,840
b. $408,480
c. $428,800
d. $473,600
Willow Valley’s April sales forecast projects that 7,000 units will sell at a price of
$10.50 per unit. The desired ending inventory is 30% higher than the beginning
inventory, which were 1,000 units. Budgeted production in April would be
a. 8,000 units
b. 7,000 units
c. 7,300 units
d. 6,300 units
A practical approach that is frequently used by managers when setting normal long-run
prices is the cost-plus approach.
a. True
b. False
Assuming that the standard fixed overhead rate is based on full capacity, the cost of
available but unused productive capacity is indicated by the
a. fixed factory overhead volume variance
b. direct labor time variance
c. direct labor rate variance
d. variable factory overhead controllable variance
The master budget is an integrated set of budgets that tie together a company’s
operating, financing and investing activities into an integrated plan for the coming year.
a. True
b. False
If a proposed expenditure of $70,000 for a fixed asset with a 4-year life has an annual
expected net cash flow and net income of $32,000 and $12,000, respectively, the cash
payback period is 2.5 years.
a. True
b. False
A bottleneck happens when a key piece of manufacturing machinery can produce 1,000
units per hour and demand for the product supports a production rate of 1,200 units per
hour.
a. True
b. False
The following information pertains to Diane Company. Assume that all balance sheet
amounts represent both average and ending balance figures and that all sales were on
credit.
Assets
Liabilities and Stockholders’ Equity
Income Statement
What is the price earnings ratio for Diane Company?
a. 8.0 times
b. 2.5 times
c. 4.0 times
d. 6.0 times
The budgetary unit of an organization which is led by a manager who has both the
authority over and responsibility for the unit’s performance is known as a
a. control center
b. budgetary area
c. responsibility center
d. managerial department
Depreciation expense’”office
The following are some of the costs incurred by Cupcake Company. Identify them as
either:
a. Prime costs
b. Conversion costs
c. Both prime and conversion costs
d. Neither prime or conversion costs
Only a single line, which represents the difference between total sales revenues and
total costs, is plotted on the cost-volume-profit chart.
a. True
b. False
If variable selling and administrative expenses totaled $120,000 for the year (80,000
units at $1.50 each) and the planned variable selling and administrative expenses totaled
$136,500 (78,000 units at $1.75 each), the effect of the unit cost factor on the change in
contribution margin is:
a. $19,500 decrease
b. $19,500 increase
c. $20,000 decrease
d. $20,000 increase
Where a business’s revenues exactly equal costs
Match the following terms with their definitions.
a. Relevant range
b. Break-even point
c. Contribution margin
d. Fixed costs
e. Variable costs
Woodpecker Co. has $296,000 in accounts receivable on January 1. Budgeted sales for
January are $860,000. Woodpecker Co. expects to sell 20% of its merchandise for cash.
Of the remaining 80% of sales on account, 75% are expected to be collected in the
month of sale and the remainder the following month. The January cash collections
from sales are
a. $812,000
b. $688,000
c. $468,000
d. $984,000
The following data relate to direct labor costs for the current period:
What is the direct labor time variance?
a. $36,000 unfavorable
b. $35,000 unfavorable
c. $23,000 favorable
d. $22,000 favorable
The numerator of the rate earned on total assets ratio is
a. net income
b. net income plus tax expense
c. net income plus interest expense
d. net income minus preferred dividends
Which method of evaluating capital investment proposals uses the concept of present
value to compute a rate of return?
a. average rate of return
b. accounting rate of return
c. cash payback period
d. internal rate of return
Variable costs are costs that remain constant in total dollar amount as the level of
activity changes.
a. True
b. False
A company is considering purchasing a machine for $21,000. The machine will
generate income from operations of $2,000; annual net cash flows from the machine
will be $3,500. The payback period for the new machine is 6 years.
a. True
b. False