1) Are the materials costs and processing costs relevant in the choice between
alternatives A and B? (Ignore the equipment rental and occupancy costs in this
question.)
A) Both materials costs and processing costs are relevant
B) Only materials costs are relevant
C) Neither materials costs nor processing costs are relevant
D) Only processing costs are relevant
2) The journal entry to record the allocation of any underapplied or overapplied
manufacturing overhead for September would include the following:
A.credit to Cost of Goods Sold of $211,880
B.debit to Cost of Goods Sold of $5,670
C.credit to Cost of Goods Sold of $5,670
D.debit to Cost of Goods Sold of $211,880
3) What is the total amount of the costs listed above that are NOT direct costs of the
Northridge Store?
A) $172,000
B) $33,000
C) $80,000
D) $94,000
4) Hossack Corporation produces a single product and has the following cost structure:
The unit product cost under variable costing is:
A.$103 per unit
B.$133 per unit
C.$111 per unit
D.$110 per unit
5) Gershon Air uses two measures of activity, flights and passengers, in the cost
formulas in its budgets and performance reports. The cost formula for plane operating
costs is $38,720 per month plus $2,061 per flight plus $9 per passenger. The company
expected its activity in June to be 76 flights and 238 passengers, but the actual activity
was 75 flights and 239 passengers. The actual cost for plane operating costs in June was
$196,310. The spending variance for plane operating costs in June would be closest to:
A.$864 F
B.$1,188 U
C.$1,188 F
D.$864 U
6) Sapien Corporation has provided the following data for the most recent year:
The company’s gross margin percentage is closest to:
A.52.3%
B.1691.2%
C.5.9%
D.34.3%
7) 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.
The activity rate for the Supervising activity cost pool under activity-based costing is
closest to:
A.$6.67 per batch
B.$4.00 per batch
C.$21.20 per batch
D.$100.00 per batch
8) The company’s dividend yield ratio is closest to:
A.1.7%
B.17.1%
C.1.3%
D.26.3%
9) All the following are considered to be benefits of participative budgeting, except for:
A.Individuals at all organizational levels are recognized as being part of a team; this
results in greater support for the organization.
B.The budget estimates are prepared by those in directly involved in activities.
C.When managers set their own targets for the budget, top management need not be
concerned with the overall profitability of operations.
D.Managers are held responsible for reaching their goals and cannot easily shift
responsibility by blaming unrealistic goals set by others.
10) Marbry Corporation’s balance sheet and income statement appear below:
Cash dividends were $21. The company did not issue any bonds or repurchase any of its
own common stock during the year. The net cash provided by (used in) financing
activities for the year was:
A.$4
B.($22)
C.($5)
D.($21)
11) Bagley Corporation has two service departments and two operating departments.
The space occupied by each department follows:
The fixed costs of Custodial Services are allocated on the basis of square feet. If these
costs are budgeted at $38,000, the amount of cost allocated to General Administration
under the direct method would be:
A.$0
B.$5,700
C.$6,000
D.$7,125
12) Kovack Corporation’s net operating income in Year 2 was $66,571, net income
before taxes was $46,571, and the net income was $32,600. Total common stock was
$120,000 at the end of both Year 2 and Year 1. The par value of common stock is $2 per
share. The company’s total stockholders’ equity at the end of Year 2 amounted to
$962,000 and at the end of Year 1 to $930,000. The company declared and paid $600
dividends on common stock. The market price per share was $4.37. The company’s
dividend yield ratio for Year 2 is closest to:
A.0.2%
B.1.3%
C.1.9%
D.0.5%
13) If management decides to buy part J56 from the outside supplier rather than to
continue making the part, what would be the annual impact on the company’s overall
net operating income?
A.Net operating income would increase by $44,000 per year.
B.Net operating income would increase by $10,000 per year.
C.Net operating income would decline by $10,000 per year.
D.Net operating income would decline by $44,000 per year.