1) The company’s equity multiplier at the end of Year 2 is closest to:
A.0.64
B.1.65
C.1.57
D.0.61
Equity multiplier = Average total assets* Average stockholders’ equity*
= $1,179,000 $716,000 = 1.65 (rounded)
*Average total assets = ($1,198,000 + $1,160,000) 2 = $1,179,000
**Average stockholders’ equity = ($732,000 + $700,000) 2 = $716,000
Fayer Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $4,500. The market price of common
stock at the end of Year 2 was $10.88 per share.
2) Index Corporation uses the FIFO method in its process costing system. The first
processing department, the Forming Department, started the month with 17,000 units in
its beginning work in process inventory that were 10% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$9,010. An additional 76,000 units were started into production during the month and
83,000 units were completed and transferred to the next processing department. There
were 10,000 units in the ending work in process inventory of the Forming Department
that were 70% complete with respect to conversion costs. A total of $445,915 in
conversion costs were incurred in the department during the month.
The cost per equivalent unit for conversion costs for the month is closest to:
A.$5.050
B.$5.300
C.$5.867
D.$5.150
3) Anders Corporation has two service departments and two operating departments. The
costs of the Personnel Department are allocated to other departments on the basis of the
number of employees in the departments. Departments and number of employees are as
follows:
Costs in the Personnel Department total $882,000 per year.
Suppose the company uses the direct method of allocation. The amount of Personnel
Department cost that would be allocated to Operating Department 2 would be:
A.$0
B.$294,000
C.$270,000
D.$264,600
4) Feltner 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 49,000 units and sold 42,000 units. The company’s only product is sold for
$225 per unit.
The net operating income for the year under super-variable costing is:
A.$(210,000)
B.$532,000
C.$882,000
D.$399,000
5) The management of Fannin Corporation is considering dropping product H58S. Data
from the company’s accounting system appear below:
In the company’s accounting system all fixed expenses of the company are fully
allocated to products. Further investigation has revealed that $90,000 of the fixed
manufacturing expenses and $42,000 of the fixed selling and administrative expenses
are avoidable if product H58S is discontinued. What would be the effect on the
company’s overall net operating income if product H58S were dropped?
A) Overall net operating income would decrease by $137,000.
B) Overall net operating income would increase by $137,000.
C) Overall net operating income would decrease by $19,000.
D) Overall net operating income would increase by $19,000.
6) The company’s equity multiplier at the end of Year 2 is closest to:
A.0.69
B.2.23
C.0.45
D.1.45
7) Jackson Industries uses a standard cost system in which direct materials inventory is
carried at standard cost. Jackson has established the following standards for one unit of
product.
During May, Jackson purchased 125,000 pounds of direct material at a total cost of
$475,000. The total factory wages for May were $364,000, 90 percent of which were
for direct labor. Jackson manufactured 22,000 units of product during May using
108,000 pounds of direct material and 28,000 direct labor-hours.
The labor efficiency variance for May is:
A.$5,850 Favorable
B.$7,200 Favorable
C.$6,000 Unfavorable
D.$5,850 Unfavorable
8) A manufacturing company that produces a single product has provided the following
data concerning its most recent month of operations:
The total contribution margin for the month under variable costing is:
A.$160,000
B.$88,000
C.$42,600
D.$120,000
9) Norbury Corporation’s net income last year was $34,000. The company did not sell
or retire any property, plant, and equipment last year. Changes in selected balance sheet
accounts for the year appear below:
Based solely on this information, the net cash provided by operating activities under the
indirect method on the statement of cash flows would be:
A.$52,000
B.$66,000
C.$53,000
D.$16,000
10) The overhead for the year was:
A.$732 underapplied
B.$1,348 underapplied
C.$732 overapplied
D.$1,348 overapplied
11) Novelli Corporation makes a product whose variable overhead standards are based
on direct labor-hours. The quantity standard is 0.6 hours per unit. The variable overhead
rate standard is $5.00 per hour. In September the company produced 1,600 units using
950 direct labor-hours. The actual variable overhead rate was $5.10 per hour.
The variable overhead efficiency variance for September is:
A.$51 U
B.$50 U
C.$51 F
D.$50 F
12) Barraza Corporation uses a weighted-average process costing system. Barraza has
two direct materials. One of these materials is added at the beginning of the production
process. The other material is added when processing is 50% complete. When will the
equivalent units of production for these two materials be equal?
A.when processing on beginning work in process is less than 50% complete at the start
of the period.
B.when processing on beginning work in process is more than 50% complete at the start
of the period.
C.when processing on ending work in process is over 50% complete.
D.when processing on ending work in process is less than 50% complete.
13) The company’s return on equity for Year 2 is closest to:
A.71.44%
B.4.72%
C.2.97%
D.1.93%
14) Maraby Corporation’s average collection period for Year 2 was closest to:
A.38.6 days
B.46.6 days
C.32.6 days
D.27.0 days
15) Strathman Corporation has provided the following information concerning a capital
budgeting project:
The company uses straight-line depreciation on all equipment.
The income tax expense in year 2 is:
A.$33,000
B.$48,000
C.$9,000
D.$24,000
16) The net cash provided by (used in) financing activities for the year was:
A.$(44)
B.$(71)
C.$2
D.$(29)
17) Which of the following represents the normal sequence in which the below budgets
are prepared?
A.Sales Budget, Budgeted Balance Sheet, Budgeted Income Statement
B.Budgeted Balance Sheet, Sales Budget, Budgeted Income Statement
C.Sales Budget, Budgeted Income Statement, Budgeted Balance Sheet
D.Budgeted Income Statement, Sales Budget, Budgeted Balance Sheet