Diorio Corporation keeps careful track of the time required to fill orders. The times
recorded for a particular order appear below:
The manufacturing cycle efficiency (MCE) was closest to:
A. 0.15
B. 0.05
C. 0.45
D. 0.18
Answer:
Bonine Corporation has provided the following data:
The accounts receivable turnover for this year is closest to:
A. 0.83
B. 8.94
C. 9.85
D. 1.20
Answer:
Chaffee Corporation staffs a helpline to answer questions from customers. The costs of
operating the helpline are variable with respect to the number of calls in a month. At a
volume of 33,000 calls in a month, the costs of operating the helpline total $742,500.
To the nearest whole dollar, what should be the total cost of operating the helpline costs
at a volume of 34,800 calls in a month? (Assume that this call volume is within the
relevant range.)
A. $742,500
B. $783,000
C. $704,095
D. $762,750
Answer:
The journal entry to record the incurrence of indirect labor costs is:
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
Franklin Glass Works uses a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours. Each unit requires two standard
hours of direct labor for completion. The denominator activity for the year was based
on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for
the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour.
The actual data pertaining to the manufacturing overhead for the year are presented
below:
Franklin’s fixed manufacturing overhead volume variance for the year is:
A. $6,000 unfavorable
B. $19,000 favorable
C. $25,000 favorable
D. $55,000 unfavorable
Answer:
Dieringer Corporation’s most recent balance sheet and income statement appear below:
The inventory turnover for Year 2 is closest to:
A. 1.25
B. 9.89
C. 11.13
D. 0.80
Answer:
Financial statements for Orange Company appear below:
Dividends during Year 2 totaled $156 thousand, of which $18 thousand were preferred
dividends.
The market price of a share of common stock on December 31, Year 2 was $100.
Orange Company’s accounts receivable turnover for Year 2 was closest to:
A. 15.7
B. 11.0
C. 17.7
D. 12.4
Answer:
Brayboy Tile Installation Corporation measures its activity in terms of square feet of tile
installed. Last month, the budgeted level of activity was 1,260 square feet and the actual
level of activity was 1,200 square feet. The companys owner budgets for supply costs, a
variable cost, at $3.90 per square foot. The actual supply cost last month was $4,300.
What would have been the spending variance for supply costs last month?
A) $770 F
B) $1,004 F
C) $198 F
D) $234 F
Answer:
Ahsan Company makes 60,000 units per year of a part it uses in the products it
manufactures. The unit product cost of this part is computed as follows:
An outside supplier has offered to sell the company all of these parts it needs for $45.70
a unit. If the company accepts this offer, the facilities now being used to make the part
could be used to make more units of a product that is in high demand. The additional
contribution margin on this other product would be $318,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the
part would be avoided. However, $3.50 of the fixed manufacturing overhead cost being
applied to the part would continue even if the part were purchased from the outside
supplier. This fixed manufacturing overhead cost would be applied to the company’s
remaining products.
What is the maximum amount the company should be willing to pay an outside supplier
per unit for the part if the supplier commits to supplying all 60,000 units required each
year?
A. $40.50
B. $42.30
C. $45.80
D. $5.30
Answer:
Compound V11V is used to make Hickenbottom Corporations major product. The
standard cost of V11V is $21.50 per ounce and the standard quantity is 3.6 ounces per
unit of output. In the most recent month, 1,600 ounces of the raw material were
purchased at a cost of $21.00 per ounce. When recording the purchase of materials,
Raw Materials would be:
A) credited for $34,400.
B) credited for $33,600.
C) debited for $34,400.
D) debited for $33,600.
Answer:
An unfavorable direct labor efficiency variance could be caused by:
A) an unfavorable materials quantity variance.
B) an unfavorable variable overhead rate variance.
C) a favorable materials quantity variance.
D) a favorable variable overhead rate variance.
Answer:
The following costs were incurred in September:
Prime costs during the month totaled:
A. $79,000
B. $120,000
C. $62,000
D. $40,000
Answer:
Reference: 8-19
Amadon Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its flexible budgets. During July, the company budgeted for
7,900 units, but its actual level of activity was 7,920 units. The company has provided
the following data concerning the formulas to be used in its budgeting:
The direct labor in the planning budget for July would be closest to:
A) $41,868
B) $41,080
C) $41,184
D) $41,974
Answer:
Borwan Company uses the weighted-average method in its process costing system. The
Assembly Department started the month with 8,000 units in its beginning work in
process inventory that were 70% complete with respect to conversion costs. An
additional 69,000 units were transferred in from the prior department during the month
to begin processing in the Assembly Department. There were 5,000 units in the ending
work in process inventory of the Assembly Department that were 20% complete with
respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for the
month?
A. 67,400
B. 73,000
C. 72,000
D. 66,000
Answer:
The most recent comparative balance sheet of Broekemeier Corporation appears below:
The company uses the indirect method to construct the operating activities section of its
statements of cash flows.
Which of the following is correct regarding the operating activities section of the
statement of cash flows?
A. The change in Prepaid Expenses will be added to net income; The change in Income
Taxes Payable will be subtracted from net income
B. The change in Prepaid Expenses will be subtracted from net income; The change in
Income Taxes Payable will be subtracted from net income
C. The change in Prepaid Expenses will be subtracted from net income; The change in
Income Taxes Payable will be added to net income
D. The change in Prepaid Expenses will be added to net income; The change in Income
Taxes Payable will be added to net income
Answer:
A company has provided the following data:
If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and
all other factors remain the same, net operating income will:
A. decrease by $31,875.
B. decrease by $15,000.
C. increase by $20,625.
D. decrease by $3,125.
Answer:
Kaiser Corporation bases its predetermined overhead rate on the estimated
machine-hours for the upcoming year. Data for the upcoming year appear below:
The predetermined overhead rate for the recently completed year was closest to:
A. $6.68
B. $25.02
C. $25.59
D. $18.34
Answer:
Reference: 8A-16
An outdoor barbecue grill manufacturer has a standard costing system based on
standard direct labor-hours (DLHs) as the measure of activity. Data from the companys
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What was the fixed manufacturing overhead volume variance for the period to the
nearest dollar?
A) $900 F
B) $649 F
C) $180 U
D) $720 F
Answer:
Mark Corporation produces two models of calculators. The Business model sells for
$60, and the Math model sells for $40. The variable expenses are given below:
The fixed expenses are $75,000 per month. The expected monthly sales of each model
are: Business, 1,000 units; Math, 500 units.
The contribution margin ratio for the Business model is:
A. 40%
B. 75%
C. 85%
D. 60%
Answer:
Ahsan Company makes 60,000 units per year of a part it uses in the products it
manufactures. The unit product cost of this part is computed as follows:
An outside supplier has offered to sell the company all of these parts it needs for $45.70
a unit. If the company accepts this offer, the facilities now being used to make the part
could be used to make more units of a product that is in high demand. The additional
contribution margin on this other product would be $318,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the
part would be avoided. However, $3.50 of the fixed manufacturing overhead cost being
applied to the part would continue even if the part were purchased from the outside
supplier. This fixed manufacturing overhead cost would be applied to the company’s
remaining products.
What is the net total dollar advantage (disadvantage) of purchasing the part rather than
making it?
A. $318,000
B. $(522,000)
C. $(312,000)
D. $(204,000)
Answer:
Reference: 8-23
Dukeman Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its flexible budgets. During February, the company
budgeted for 7,100 units, but its actual level of activity was 7,060 units. The company
has provided the following data concerning the formulas to be used in its budgeting:
The selling and administrative expenses in the planning budget for February would be
closest to:
A) $28,656
B) $28,818
C) $28,436
D) $28,460
Answer:
Artist Company’s net income last year was $500,000. The company has 150,000 shares
of common stock and 40,000 shares of preferred stock outstanding. There was no
change in the number of common or preferred shares outstanding during the year. The
company declared and paid dividends last year of $1.70 per share on the common stock
and $0.70 per share on the preferred stock. The earnings per share of common stock is
closest to:
A. $3.15
B. $3.52
C. $1.63
D. $3.33
Answer:
Weiss Corporation produces two models of wood chairs, Colonial and Early American.
The Colonial sells for $60 per chair and the Early American sells for $80 per chair.
Variable expenses for each model are as follows:
Total fixed expenses are $39,600 per month. Expected monthly sales are: Colonial,
1,800 units; Early American, 600 units.
The contribution margin per chair for the Colonial model is:
A. $51
B. $16
C. $35
D. $25
Answer:
Durrant Corporation has provided the following data concerning its most important raw
material, compound O96H:
When recording the use of materials in production, Raw Materials would be:
A) debited for $55,930.
B) debited for $54,264.
C) credited for $55,930.
D) credited for $54,264.
Answer:
The contribution margin ratio of Lime Corporation’s only product is 75%. The
company’s monthly fixed expense is $688,500 and the company’s monthly target profit
is $20,000. The dollar sales to attain that target profit is closest to:
A. $531,375
B. $944,667
C. $918,000
D. $516,375
Answer:
The contribution margin ratio is 30% for the Honeyville Company and the break-even
point in sales is $150,000. If the company’s target net operating income is $60,000,
sales would have to be:
A. $200,000
B. $350,000
C. $250,000
D. $210,000
Answer:
A cement manufacturer has supplied the following data:
If the company increases its unit sales volume by 3% without increasing its fixed
expenses, then total net operating income should be closest to:
A. $84,460
B. $99,940
C. $2,460
D. $83,316
Answer:
Avril Company makes collections on sales according to the following schedule:
30% in the month of sale
60% in the month following sale
8% in the second month following sale
The following sales are expected:
Cash collections in March should be budgeted to be:
A. $110,000
B. $110,800
C. $105,000
D. $113,000
Answer:
Montgomery Corporation produces and sells a single product. Data concerning that
product appear below:
Fixed expenses are $239,000 per month. The company is currently selling 3,000 units
per month. The marketing manager would like to cut the selling price by $12 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. increase of $102,000
B. decrease of $30,000
C. decrease of $6,000
D. increase of $30,000
Answer:
Maintenance costs at a Tierce Corporation factory are listed below:
Management believes that maintenance cost is a mixed cost that depends on
machine-hours. Using the high-low method to estimate the variable and fixed
components of this cost, these estimates would be closest to:
A. $14.54 per machine-hour; $52,671 per month
B. $9.27 per machine-hour; $19,076 per month
C. $0.11 per machine-hour; $52,591 per month
D. $9.27 per machine-hour; $19,071 per month
Answer:
When the actual direct labor-hours exceeds the standard direct labor-hours allowed for
the actual output of the period, the journal entry would include:
A. Debit to Wages Payable; Credit to Labor Efficiency Variance
B. Debit to Work-In-Process; Credit to Labor Efficiency Variance
C. Debit to Wages Payable; Debit to Labor Efficiency Variance
D. Debit to Work-In-Process; Debit to Labor Efficiency Variance
Answer:
Leija Manufacturing Company uses a job-order costing system and started the month of
March with one job in process (Job #359). This job had $500 of cost assigned to it at
this time. During March, Leija assigned production costs as follows to the jobs worked
on during the month:
During March, Leija completed and sold Job #359. Job #360 was also completed but
was not sold by month end. Job #361 was not completed by the end of March.
What is Leija’s cost of goods manufactured for March?
A. $6,500
B. $14,100
C. $14,600
D. $16,500
Answer:
The most recent balance sheet and income statement of Heldt Corporation appear
below:
The company paid a cash dividend and it did not dispose of any property, plant, and
equipment. The company did not purchase any bonds payable or repurchase any of its
own common stock. The following question pertain to the company’s statement of cash
flows.
The net cash provided by (used in) financing activities for the year was:
A. $(25)
B. $(30)
C. $3
D. $(8)
Answer:
On April 1, Stelter Corporation had $34,000 of raw materials on hand. During the
month, the company purchased an additional $60,000 of raw materials. During April,
$70,000 of raw materials were requisitioned from the storeroom for use in production.
These raw materials included both direct and indirect materials. The indirect materials
totaled $7,000. Prepare journal entries to record these events. Use those journal entries
to answer the following questions:
The credits to the Manufacturing Overhead account as a consequence of the raw
materials transactions in April total:
A. $0
B. $70,000
C. $63,000
D. $7,000
Answer:
Reference: 8-60
Marten Corporation makes a product with the following standards for direct labor and
variable overhead:
In May the company produced 2,800 units using 300 direct labor-hours. The actual
variable overhead cost was $1,620. The company applies variable overhead on the basis
of direct labor-hours.
The variable overhead efficiency variance for May is:
A) $100 U
B) $108 F
C) $108 U
D) $100 F
Answer: