1) pardise company plans the following beginning and ending inventory levels (in
units) for july:
two units of raw material are needed to produce each unit of finished product.
if the company plans to sell 640,000 units during the year, the number of units it would
have to manufacture during the year would be:
a.670,000 units
b.640,000 units
c.690,000 units
d.590,000 units
2) cromuel corporation has provided the following data for january. the beginning
balance in the raw materials inventory account was $27,000. during the month, the
company made raw materials purchases amounting to $50,000. at the end of the month,
the balance in the raw materials inventory account was $24,000. direct labor cost was
$53,000 and manufacturing overhead was $70,000. the beginning balance in the work
in process account was $14,000 and the ending balance was $12,000. the beginning
balance in the finished goods account was $33,000 and the ending balance was
$51,000. sales totaled $270,000. selling expense was $21,000 and administrative
expense was $48,000.
the total manufacturing cost for january was:
a.$70,000
b.$123,000
c.$176,000
d.$173,000
3) assume there was no beginning work in process inventory and the ending work in
process inventory is 70% complete with respect to conversion costs. under the
weighted-average method, the number of equivalent units of production with respect to
conversion costs would be:
a.the same as the units completed
b.less than the units completed
c.the same as the units started during the period
d.less than the units started during the period
4) a company anticipates a depreciation deduction of $30,000 in year 2 of a project. the
company’s tax rate is 30% and its discount rate is 10%. the present value of the
depreciation tax shield resulting from this deduction is closest to:
a.$9,000
b.$17,355
c.$7,438
d.$21,000
5) dilom farm supply is located in a small town in the rural west. data regarding the
store’s operations follow:
sales are budgeted at $260,000 for november, $230,000 for december, and $210,000 for
january.
collections are expected to be 55% in the month of sale, 40% in the month following
the sale, and 5% uncollectible.
the cost of goods sold is 80% of sales.
the company purchases 50% of its merchandise in the month prior to the month of sale
and 50% in the month of sale. payment for merchandise is made in the month following
the purchase.
other monthly expenses to be paid in cash are $21,700.
monthly depreciation is $17,000.
ignore taxes.
december cash disbursements for merchandise purchases would be:
a.$184,000
b.$196,000
c.$176,000
d.$84,000
6) murdoch corporation has provided the following data concerning its only product:
what is the margin of safety in dollars?
a.$2,158,320
b.$5,995,333
c.$6,834,680
d.$8,993,000
7) hanson corporation uses the weighted-average method in its process costing system.
data concerning the first processing department for the most recent month are listed
below:
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
the cost per equivalent unit for conversion costs for the first department for the month is
closest to:
a.$46.81
b.$50.98
c.$48.55
d.$48.39
8) littau inc. has provided the following data concerning an investment project that has
been proposed:
the company’s tax rate is 30%. for tax purposes, the entire initial investment will be
depreciated over 7 years without any reduction for salvage value. the company uses a
discount rate of 19%.
the net present value of the project is closest to:
a.-$4,949
b.$25,780
c.$23,766
d.-$6,412
9) data concerning amburn corporation’s single product appear below:
fixed expenses are $179,000 per month. the company is currently selling 3,000 units per
month. the marketing manager would like to cut the selling price by $9 and increase the
advertising budget by $12,000 per month. the marketing manager predicts that these
two changes would increase monthly sales by 500 units. what should be the overall
effect on the company’s monthly net operating income of this change?
a.decrease of $7,500
b.increase of $19,500
c.decrease of $19,500
d.increase of $43,500
10) jauron kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during september, the kennel budgeted
for 2,300 tenant-days, but its actual level of activity was 2,310 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for september:
the administrative expenses in the planning budget for september would be closest to:
a.$7,362
b.$7,181
c.$7,360
d.$7,212
11) jauron kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during september, the kennel budgeted
for 2,300 tenant-days, but its actual level of activity was 2,310 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for september:
the net operating income in the planning budget for september would be closest to:
a.$10,772
b.$6,979
c.$10,866
d.$6,870
12) excerpts from stys corporation’s most recent balance sheet and income statement
appear below:
dividends on common stock during year 2 totaled $50 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$8.20 per share.
the return on common stockholders’ equity for year 2 is closest to:
a.13.02%
b.11.83%
c.13.42%
d.14.77%
13) golebiewski inc. bases its manufacturing overhead budget on budgeted direct
labor-hours. the direct labor budget indicates that 4,900 direct labor-hours will be
required in november. the variable overhead rate is $8.40 per direct labor-hour. the
company’s budgeted fixed manufacturing overhead is $78,400 per month, which
includes depreciation of $10,290. all other fixed manufacturing overhead costs
represent current cash flows. the company recomputes its predetermined overhead rate
every month. the predetermined overhead rate for november should be:
a.$22.30
b.$16.00
c.$24.40
d.$8.40
14) twichell inc., a local retailer, has provided the following data for the month of
december:
the cost of goods sold for december was:
a.$131,000
b.$128,000
c.$134,000
d.$200,000
15) (ignore income taxes in this problem.) tanna corporation is considering three
investment projects: o, p, and q. project o would require an investment of $38,000,
project p of $49,000, and project q of $91,000. no other cash outflows would be
involved. the present value of the cash inflows would be $42,180 for project o, $53,900
for project p, and $91,910 for project q. rank the projects according to the profitability
index, from most profitable to least profitable.
a.p,o,q
b.o,q,p
c.q,o,p
d.o,p,q
16) the buffalo division of alfred products, inc. has the capacity to manufacture 10,000
units of a certain part each year. this part sells for $12 per unit on the outside market.
the albany division of alfred products, inc. buys 3,000 units of this part each year from
buffalo, and thus far has paid the market price. harlow company (an outside supplier)
has recently offered to sell albany 3,000 units per year of the same part. buffalo
division’s costs relating to the product are:
suppose that the albany division buys the 3,000 units from the outside supplier at a
price of $10 per unit. also suppose that the buffalo division can sell only 6,000 units on
the outside market. this decision would have no effect on total fixed costs. as a result of
albany shifting its purchases to the outside supplier, the yearly net operating income of
alfred products, inc. as a whole will:
a.decrease by $9,000
b.increase by $9,000
c.decrease by $6,000
d.increase by $6,000
17) galimba corporation, which produces commercial windows, has provided the
following data:
the variable overhead efficiency variance for supplies is:
a.$1,458 u
b.$6,611 u
c.$6,611 f
d.$1,458 f
18) grundhoefer kennel uses tenant-days as its measure of activity; an animal housed in
the kennel for one day is counted as one tenant-day. during april, the kennel budgeted
for 2,000 tenant-days, but its actual level of activity was 1,990 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for april:
the activity variance for wages and salaries in april would be closest to:
a.$66 f
b.$564 u
c.$564 f
d.$66 u
19) compos corporation has provided the following data concerning its only product:
the margin of safety as a percentage of sales is closest to:
a.18%
b.15%
c.85%
d.82%
20) deano products is a division of a major corporation. the following data are for the
last year of operations:
the division’s turnover is closest to:
a.32.26
b.2.89
c.0.10
d.3.18