1) Aaker Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the unit product cost for the month under variable costing?
A.$66 per unit
B.$93
C.$87
D.$60
2) Larance Detailing’s cost formula for its materials and supplies is $2,230 per month
plus $1 per vehicle. For the month of November, the company planned for activity of 75
vehicles, but the actual level of activity was 25 vehicles. The actual materials and
supplies for the month was $2,160.
The activity variance for materials and supplies in November would be closest to:
A.$145 U
B.$145 F
C.$50 U
D.$50 F
3) Quiller Corporation manufactures and sells one product. The following information
pertains to the company’s first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 32,000 units and sold 31,000 units. The company’s only product is sold for
$233 per unit.
The company is considering using either super-variable costing or a variable costing
system that assigns $12 of direct labor cost to each unit that is produced. Which of the
following statements is true regarding the net operating income in the first year?
A.Super-variable costing net operating income exceeds variable costing net operating
income by $63,000.
B.Super-variable costing net operating income exceeds variable costing net operating
income by $12,000.
C.Variable costing net operating income exceeds super-variable costing net operating
income by $12,000.
D.Variable costing net operating income exceeds super-variable costing net operating
income by $63,000.
4) Lake Corporation has an activity-based costing system with three activity cost
pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two
overhead accounts, equipment expense and indirect labor, are allocated to the three
activity cost pools based on resource consumption. Data used in the first stage
allocations follow:
Processing costs are assigned to products using machine-hours (MHs) and Supervising
costs are assigned to products using the number of batches. The costs in the Other
activity cost pool are not assigned to products. Activity data for the company’s two
products follow:
Finally, the costs of Processing and Supervising are combined with the following sales
and direct cost data to determine product margins.
How much overhead cost is allocated to the Supervising activity cost pool under
activity-based costing?
A.$19,200
B.$2,000
C.$39,200
D.$21,200
5) The net cash provided by (used in) investing activities for the year was:
A.$74
B.$(74)
C.$(72)
D.$72
6) The Portland Division’s operating data for the past two years is as follows:
The Portland Division’s margin in Year 2 was 150% of the margin for Year 1.
The sales for Year 2 were:
A.$750,000
B.$2,000,000
C.$3,846,154
D.$2,400,000
7) O’Neill, Incorporated’s segmented income statement for the most recent month is
given below.
For each of the following questions, refer back to the above original data.
The marketing department believes that a promotional campaign at Store A costing
$6,000 will increase sales by $15,000. If its plan is adopted, overall company net
operating income should:
A.decrease by $1,800
B.decrease by $10,200
C.increase by $10,200
D.increase by $1,800
8) The net present value of the entire project is closest to:
A.$141,583
B.$223,630
C.$381,583
D.$238,000
9) If the company bases its predetermined overhead rate on capacity, by how much was
manufacturing overhead underapplied or overapplied?
The management of Cordona Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. The company’s controller
has provided an example to illustrate how this new system would work. In this
example, the allocation base is machine-hours and the estimated amount of the
allocation base for the upcoming year is 27,000 machine-hours. In addition, capacity is
33,000 machine-hours and the actual level of activity for the year is 27,900
machine-hours. All of the manufacturing overhead is fixed and is $231,660 per year.
For simplicity, it is assumed that this is the estimated manufacturing overhead for the
year as well as the manufacturing overhead at capacity. It is further assumed that this is
also the actual amount of manufacturing overhead for the year. A number of jobs were
worked on during the year, one of which was Job I86N. This job required 370
machine-hours.
A.$35,802 Underapplied
B.$7,722 Underapplied
C.$35,802 Overapplied
D.$7,722 Overapplied
Predetermined overhead rate = Estimated total manufacturing overhead at capacity /
Estimated total amount of the allocation base at capacity = $231,660 / 33,000
machine-hours = $7.02 per machine-hour
10) Cowles Corporation, Inc. makes and sells a single product, Product R. Three yards
of Material K are needed to make one unit of Product R. Budgeted production of
Product R for the next five months is as follows:
The company wants to maintain monthly ending inventories of Material K equal to 30%
of the following month’s production needs. On July 31, this requirement was not met
because only 3,500 yards of Material K were on hand. The cost of Material K is $0.80
per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest
of the year.
The total needs (i.e., production requirements plus desired ending inventory) of
Material K for November are:
A.40,800 yards
B.44,940 yards
C.37,380 yards
D.52,410 yards