1) Pardoe, Inc., manufactures a single product in which variable manufacturing
overhead is assigned on the basis of standard direct labor-hours. The company uses a
standard cost system and has established the following standards for one unit of
product:
During March, the following activity was recorded by the company:
The company produced 3,000 units during the month.
A total of 8,000 pounds of material were purchased at a cost of $23,000.
There was no beginning inventory of materials on hand to start the month; at the end of
the month, 2,000 pounds of material remained in the warehouse.
During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour.
Variable manufacturing overhead costs during March totaled $1,800.
The direct materials purchases variance is computed when the materials are purchased.
The labor rate variance for March is:
A.$480 U
B.$800 U
C.$480 F
D.$800 F
2) Danoff Midwifery’s cost formula for its wages and salaries is $1,540 per month plus
$497 per birth. For the month of March, the company planned for activity of 112 births,
but the actual level of activity was 107 births. The actual wages and salaries for the
month was $56,850. The activity variance for wages and salaries in March would be
closest to:
A.$2,485 U
B.$354 U
C.$2,485 F
D.$354 F
3) Sarver Corporation uses the weighted-average method in its process costing system.
The Fitting Department is the second department in its production process. The data
below summarize the department’s operations in March.
The Fitting Department’s cost per equivalent unit for conversion cost for March was
$8.24.
How much conversion cost was assigned to the units transferred out of the Fitting
Department during March?
A.$482,287.20
B.$502,640.00
C.$523,240.00
D.$561,144.00
4) Which of the following would be considered a cash inflow in the financing activities
section of the statement of cash flows?
A.Issuing bonds payable.
B.Receiving cash from customers.
C.Sale of equipment.
D.Collection of a loan made to another company.
5) Klein Corporation has provided the following data:
The company’s equity multiplier is closest to:
A.1.24
B.0.56
C.1.80
D.0.81
6) The company’s gross margin percentage for Year 2 is closest to:
A.62.5%
B.4.2%
C.38.5%
D.2381.0%
7) The average sale period for Year 2 is closest to:
A.28.1 days
B.45.0 days
C.50.0 days
D.227.7 days
8) BieryCorporation makes a product with the following standard costs:
The company produced 4,100 units in April using 5,380 liters of direct material and
2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the
direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and
the actual variable overhead rate was $2.90 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The labor rate variance for April is:
A.$1,968 F
B.$2,088 F
C.$2,088 U
D.$1,968 U
9) Nations Corporation has designed a new product, K48, whose variable cost is $56.70
per unit and that requires 3.10 minutes of the constrained resource. The opportunity cost
is $39.00 per minute used of the constrained resource. What is the minimum acceptable
selling price for the new product?
A.$177.60
B.$95.70
C.$56.70
D.$120.90
10) Sawyer Manufacturing Corporation uses a predetermined overhead rate based on
direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation
worked 57,000 actual direct labor-hours and incurred $345,000 of actual manufacturing
overhead cost. The Corporation had estimated that it would work 55,000 direct
labor-hours during the year and incur $330,000 of manufacturing overhead cost. The
Corporation’s manufacturing overhead cost for the year was:
A.overapplied by $15,000
B.underapplied by $15,000
C.overapplied by $3,000
D.underapplied by $3,000
