1) division x makes a part that it sells to customers outside of the company. data
concerning this part appear below:
selling price to outside customers $50
variable cost per unit $30
total fixed costs $400,000
capacity in units 25,000
division y of the same company would like to use the part manufactured by division x
in one of its products. division y currently purchases a similar part made by an outside
company for $49 per unit and would substitute the part made by division x. division y
requires 5,000 units of the part each period. division x can sell all of the units it makes
to outside customers. what is the lowest acceptable transfer price from the standpoint of
the selling division?
a.$50
b.$49
c.$46
d.$30
2) anola company has two products: a and b. the company uses activity-based costing.
the estimated total cost and expected activity for each of the company’s three activity
cost pools are as follows:
the activity rate under the activity-based costing system for activity 3 is closest to:
a.$30.00
b.$30.50
c.$90.00
d.$67.78
3) hardey corporation’s balance sheet and income statement appear below:
cash dividends were $8. the company sold equipment for $13 that was originally
purchased for $8 and that had accumulated depreciation of $8.
the net cash provided by (used by) investing activities for the year was:
a.($96)
b.($83)
c.$83
d.$13
4) mcneilly inc. is considering using stocks of an old raw material in a special project.
the special project would require all 220 kilograms of the raw material that are in stock
and that originally cost the company $1,804 in total. if the company were to buy new
supplies of this raw material on the open market, it would cost $8.55 per kilogram.
however, the company has no other use for this raw material and would sell it at the
discounted price of $7.75 per kilogram if it were not used in the special project. the sale
of the raw material would involve delivery to the purchaser at a total cost of $97.00 for
all 220 kilograms. what is the relevant cost of the 220 kilograms of the raw material
when deciding whether to proceed with the special project?
a.$1,705
b.$1,881
c.$1,804
d.$1,608
5) the following data have been provided by walch corporation from its activity-based
costing accounting system:
distribution of resource consumption across activity cost pools:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
required:
a. determine the total amount of supervisory wages and factory utilities costs that would
be allocated to the machining activity cost pool. show your work!
b. determine the total amount of supervisory wages and factory utilities costs that would
not be assigned to products. show your work!
6) in a recent period 12,250 units were made and there was a favorable labor efficiency
variance of $22,500. if 41,000 labor-hours were worked and the standard wage rate was
$12 per labor-hour, the standard hours allowed per unit of output is closest to:
a.3.19
b.3.35
c.3.50
d.6.00
7) crose inc. is working on its cash budget for november. the budgeted beginning cash
balance is $22,000. budgeted cash receipts total $118,000 and budgeted cash
disbursements total $116,000. the desired ending cash balance is $40,000.
the excess (deficiency) of cash available over disbursements for november will be:
a.$2,000
b.$20,000
c.$24,000
d.$140,000
8) in a cash budget for march, the total cash disbursements would be:
a.$11,200
b.$13,900
c.$22,300
d.$16,900
9) lafaso corporation has provided the following data concerning its direct labor costs
for july:
the labor rate variance for july would be recorded as a:
a.credit of $7,014
b.debit of $8,584
c.debit of $7,014
d.credit of $8,584
10) the apoundright company uses standard costing and has established the following
standards for its single product:
direct materials: 2 gallons at $3 per gallon
direct labor: 0.5 hours at $8 per hour
variable overhead: 0.5 hours at $2 per hour
during november, the company made 4,000 units and incurred the following costs:
direct materials purchased: 8,100 gallons at $3.10 per gallon
direct materials used: 7,600 gallons
direct labor used: 2,200 hours at $8.25 per hour
actual variable overhead: $4,175
the company applies variable overhead to products on the basis of standard direct
labor-hours.
the materials price variance for november was:
a.$2,310 u
b.$2,310 f
c.$810 u
d.$810 f
11) fistman corporation has a parts division that does work for other divisions in the
company as well as for outside customers. the company’s machine products division has
asked the parts division to provide it with 10,000 special parts each year. the special
parts would require $15.00 per unit in variable production costs.
the machine products division has a bid from an outside supplier for the special parts at
$29.00 per unit. in order to have time and space to produce the special part, the parts
division would have to cut back production of another part-the h56 that it presently is
producing. the h56 sells for $32.00 per unit, and requires $00 per unit in variable
production costs. packaging and shipping costs of the h56 are $3.00 per unit. packaging
and shipping costs for the new special part would be only $1.00 per unit. the parts
division is now producing and selling 40,000 units of the h56 each year. production and
sales of the h56 would drop by 20% if the new special part is produced for the machine
products division.
required:
a. what is the range of transfer prices within which both the divisions’ profits would
increase as a result of agreeing to the transfer of 10,000 special parts per year from the
parts division to the machine products division?
b. is it in the best interests of fistman corporation for this transfer to take place? explain.
12) gildon corporation produces metal telephone poles. in the most recent month, the
company budgeted production of 7,200 poles. actual production was 7,600 poles.
according to standards, each pole requires 6.5 machine-hours. the actual machine-hours
for the month were 49,890 machine-hours. the budgeted indirect labor is $1.20 per
machine-hour. the actual indirect labor cost for the month was $56,408. the variable
overhead efficiency variance for indirect labor is:
a.$588 u
b.$2,872 f
c.$588 f
d.$2,872 u
13) the management of fanton corporation is considering introducing a new producta
compact lawn blower. at a selling price of $38 per unit, management projects sales of
60,000 units. the lawn blower would require an investment of $500,000. the desired
return on investment is 18%.
the target cost per lawn blower is closest to:
a.$38.00
b.$43.07
c.$44.84
d.$36.50
14) the management of hettler corporation would like to set the selling price on a new
product using the absorption costing approach to cost-plus pricing. the company’s
accounting department has supplied the following estimates for the new product:
management plans to produce and sell 4,000 units of the new product annually. the new
product would require an investment of $643,000 and has a required return on
investment of 20%.
required:
a. determine the unit product cost for the new product.
b. determine the markup percentage on absorption cost for the new product.
c. determine the target selling price for the new product using the absorption costing
approach.
15) variable service department costs should be charged to operating departments at the
end of the period according to the formula:
a.budgeted rate x budgeted activity
b.budgeted rate x actual activity
c.actual rate x actual activity
d.budgeted total cost x percentage of peak-period capacity required
16) brubacher company makes four products in a single facility. these products have the
following unit product costs:
the grinding machines are potentially the constraint in the production facility. a total of
20,500 minutes are available per month on these machines.
direct labor is a variable cost in this company.
which product makes the least profitable use of the grinding machines?
a.product a
b.product b
c.product c
d.product d
17) at the beginning of october, cozier corporation had $34,000 of raw materials on
hand. during the month, the company purchased an additional $78,000 of raw materials.
during october, $92,000 of raw materials were requisitioned from the storeroom for use
in production. the credits to the raw materials account for the month of october total:
a.$92,000
b.$34,000
c.$78,000
d.$112,000
18) nasson corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during august, the
company budgeted for 6,700 units, but its actual level of activity was 6,730 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for august:
the direct materials in the flexible budget for august would be closest to:
a.$71,020
b.$71,338
c.$72,913
d.$72,264
19) wolle corporation estimates that its variable manufacturing overhead is $11.60 per
machine-hour and its fixed manufacturing overhead is $298,936 per period.
if the denominator level of activity is 4,400 machine-hours, the predetermined overhead
rate would be:
a.$67.94
b.$79.54
c.$1,160.00
d.$11.60
20) embertson framing’s cost formula for its supplies cost is $1,350 per month plus $16
per frame. for the month of june, the company planned for activity of 816 frames, but
the actual level of activity was 812 frames. the actual supplies cost for the month was
$14,680. the activity variance for supplies cost in june would be closest to:
a.$64 u
b.$274 u
c.$64 f
d.$274 f