1) Monce Corporation has two divisions: Home Division and Commercial Division.
The following report is for the most recent operating period:
The common fixed expenses have been allocated to the divisions on the basis of sales.
Required:
a. What is the Home Division’s break-even in sales dollars?
b. What is the Commercial Division’s break-even in sales dollars?
c. What is the company’s overall break-even in sales dollars?
2) Moccio Enterprises, Inc., produces and sells a single product whose selling price is
$120.00 per unit and whose variable expense is $37.20 per unit. The company’s
monthly fixed expense is $356,040.
Assume the company’s target profit is $15,000. The dollar sales to attain that target
profit is closest to:
A.$371,040
B.$537,739
C.$701,894
D.$1,196,903
3) Hammes Corporation manufactures and sells a single product. The company uses
units as the measure of activity in its budgets and performance reports. During
February, the company budgeted for 5,500 units, but its actual level of activity was
5,510 units. The company has provided the following data concerning the formulas to
be used in its budgeting:
The activity variance for net operating income in February would be closest to:
A.$191 U
B.$1,651 U
C.$191 F
D.$1,651 F
4) Sorrow 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 November, the kennel budgeted
for 2,300 tenant-days, but its actual level of activity was 2,350 tenant-days. The kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for November:
Data used in budgeting:
Actual results for November:
The activity variance for wages and salaries in November would be closest to:
A.$310 U
B.$310 F
C.$590 U
D.$590 F
5) Mankus Inc. is considering using stocks of an old raw material in a special project.
The special project would require all 120 kilograms of the raw material that are in stock
and that originally cost the company $816 in total. If the company were to buy new
supplies of this raw material on the open market, it would cost $7.25 per kilogram.
However, the company has no other use for this raw material and would sell it at the
discounted price of $6.75 per kilogram if it were not used in the special project. The
sale of the raw material would involve delivery to the purchaser at a total cost of $50
for all 120 kilograms. What is the relevant cost of the 120 kilograms of the raw material
when deciding whether to proceed with the special project?
A) $810
B) $870
C) $760
D) $816
6) Kienle Corporation’s Year 2 income statement appears below:
The company’s total assets at the end of Year 2 amounted to $1,359,000 and at the end
of Year 1 to $1,320,000. The company’s return on total assets for Year 2 is closest to:
A.2.48%
B.3.14%
C.2.52%
D.3.10%
7) Warburton Corporation has two divisions: Alpha and Beta. Data from the most recent
month appear below:
The company’s common fixed expenses total $85,690. The break-even in sales dollars
for Alpha Division is closest to:
A.$273,623
B.$162,338
C.$420,116
D.$217,117
8) A manufacturing company that produces a single product has provided the following
data concerning its most recent month of operations:
What is the variable costing unit product cost for the month?
A.$94 per unit
B.$115 per unit
C.$90 per unit
D.$111 per unit
9) Zimmerli Corporation manufactures a single product. The following data pertain to
the company’s operations over the last two years:
Required:
a. Determine the absorption costing net operating income last year. Show your work!
b. Determine the absorption costing net operating income this year. Show your work!
10) Forbs Corporation uses the direct method to allocate service department costs to
operating departments. The company has two service departments, Information
Technology and Personnel, and two operating departments, Fabrication and
Customization.
Information Technology Department costs are allocated on the basis of computer
workstations and Personnel Department costs are allocated on the basis of employees.
The total Fabrication Department cost after service department allocations is closest to:
A.$468,492
B.$472,372
C.$477,287
D.$475,388
11) Ritchie Corporation manufactures a product that has the following costs:
The company uses the absorption costing approach to cost-plus pricing as described in
the text. The pricing calculations are based on budgeted production and sales of 37,000
units per year. The company has invested $160,000 in this product and expects a return
on investment of 15%.
Required:
a. Compute the markup on absorption cost.
b. Compute the selling price of the product using the absorption costing approach.
12) Carrejo Corporation has two divisions: Division M and Division N. Data from the
most recent month appear below:
Management has allocated common fixed expenses to the Divisions based on their
sales. The break-even in sales dollars for Division N is closest to:
A.$172,131
B.$219,656
C.$258,230
D.$392,211
13) The LFG Corporation makes and sells a single product, Product T. Each unit of
Product T requires 1.4 direct labor-hours at a rate of $9.80 per direct labor-hour. The
direct labor workforce is fully adjusted each month to the required workload. LFG
Corporation needs to prepare a Direct Labor Budget for the second quarter of next year.
The budgeted direct labor cost per unit of Product T is closest to:
A.$9.80
B.$11.83
C.$7.00
D.$13.72
14) Cuda Manufacturing Corporation uses a standard cost system with machine-hours
(MHs) as the activity base for overhead. The following information relates to Cuda’s
operations last year:
What total amount of manufacturing overhead cost (variable and fixed) did Cuda apply
to production?
A.$950,000
B.$985,000
C.$988,000
D.$1,045,000