1) Degeare Corporation’s balance sheet and income statement appear below:
Cash dividends were $10. The company sold equipment for $18 that was originally
purchased for $10 and that had accumulated depreciation of $5. The net cash provided
by (used in) operating activities for the year was:
A.$73
B.$76
C.$43
D.$63
2) Up to how much should the company be willing to pay to obtain enough of the
constrained resource to satisfy demand for the two existing products?
A.$52.80 per minute
B.$25.00 per minute
C.$3.30 per minute
D.$5.00 per minute
Production of product L06K would be 2,800 minutes / 16 minutes per unit of L06K =
175 units of L06K.
Because unsatisfied demand exists for product L06K, the company should be willing to
pay up to $3.30 per minute to obtain more of the constrained resource.
3) The company’s earnings per share for Year 2 is closest to:
A.$0.53 per share
B.$11.54 per share
C.$0.19 per share
D.$0.27 per share
4) Stay Corporation uses the weighted-average method in its process costing system.
The company’s ending work in process inventory consists of 8,000 units, 60% complete
with respect to materials and 80% complete with respect to conversion costs. If the total
cost in this inventory is $200,000 and if the cost for materials is $16 per equivalent unit
for the period, the conversion cost per equivalent unit of the production for the period
must be:
A.$19.25
B.$16.00
C.$25.67
D.$31.25
5) Accounts receivable turnover will normally decrease as a result of:
A.the write-off of an uncollectible account against the allowance for bad debts.
B.a significant sales volume decrease near the end of the accounting period.
C.an increase in cash sales in proportion to credit sales.
D.a change in credit policy to lengthen the period for cash discounts.
6) The Hudson Block Company has a trucking department that delivers crushed stone
from the company’s quarry to its two cement block production facilities–the West Plant
and the East Plant. Budgeted costs for the trucking department are $340,000 per year in
fixed costs and $0.30 per ton variable cost. Last year, 70,000 tons of crushed stone were
budgeted to be delivered to the West Plant and 100,000 tons of crushed stone to the East
Plant. During the year, the trucking department actually delivered 75,000 tons of
crushed stone to the West Plant and 90,000 tons to the East Plant. Its actual costs for the
year were $65,000 variable and $350,000 fixed. The level of budgeted fixed costs is
determined by peak-period requirements. The West Plant requires 40% of the
peak-period capacity and the East Plant requires 60%. The company allocates fixed and
variable costs separately.
For performance evaluation purposes, how much of the actual trucking department cost
should not be charged to the plants at the end of the year?
A.$10,000
B.$25,500
C.$0
D.$15,700
7) The company’s book value per share at the end of Year 2 is closest to:
A.$0.38 per share
B.$8.18 per share
C.$18.08 per share
D.$13.93 per share
8) Sirmons Corporation bases its predetermined overhead rate on the estimated
labor-hours for the upcoming year. At the beginning of the most recently completed
year, the Corporation estimated the labor-hours for the upcoming year at 70,000
labor-hours. The estimated variable manufacturing overhead was $9.93 per labor-hour
and the estimated total fixed manufacturing overhead was $1,649,200. The actual
labor-hours for the year turned out to be 74,000 labor-hours. The predetermined
overhead rate for the recently completed year was closest to:
A.$32.22
B.$9.93
C.$33.49
D.$23.56
9) In making the decision to buy the model 260 machine rather than the model 330
machine, the differential cost was:
A) $18,000
B) $56,000
C) $38,000
D) $40,000
10) On its statement of cash flows, what amount should Howard show for its net sales
adjusted to a cash basis (i.e., cash received from sales)?
A.$616,000
B.$623,000
C.$625,000
D.$595,000
11) Eon Corporation has provided the following data concerning its two products:
The profitability index for product Z94K is closest to:
A.$4.20 per gram
B.0.19
C.0.11
D.0.20
12) Aaker Corporation, which has only one 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.$72,000
B.$27,900
C.$234,000
D.$198,000
13) The net cash provided by (used in) investing activities for the year was:
A.$19
B.$(118)
C.$(137)
D.$118
14) The Red River Division of Alto Company produces and sells bags of pottery clay
which can either be sold to outside customers or transferred to the White Mountain
Division of Alto Company. The following data are available for the last year:
By selling to the White Mountain Division, the Red River Division will avoid $3 per
bag in selling costs.
What is the maximum transfer price the White Mountain Division should be willing to
pay?
A.$20 per bag
B.$16 per bag
C.$11 per bag
D.$14 per bag
15) Shoshoni Corporation prepares its statement of cash flows using the indirect
method. Which of the following would be added to net income in the operating
activities section of the statement?
A.Option A
B.Option B
C.Option C
D.Option D
16) Parsons Corporation uses a predetermined overhead rate based on direct labor-hours
to apply manufacturing overhead to jobs. Last year, Parsons Corporation incurred
$250,000 in actual manufacturing overhead cost. The Manufacturing Overhead account
showed that overhead was overapplied $12,000 for the year. If the predetermined
overhead rate was $8.00 per direct labor-hour, how many hours did the Corporation
work during the year?
A.31,250 hours
B.30,250 hours
C.32,750 hours
D.29,750 hours
17) Yukon Perfume Corporation manufactures three distinct perfumes (I, II, and III)
from a single joint process. The three perfumes can be sold to discount stores in the
form they are in at the split-off point. However, if the perfumes are further processed,
they can be sold to specialty stores. Costs related to each batch of perfume separation is
as follows:
For which product(s) above would it be more profitable for Yukon to sell after further
processing rather than at the split-off point?
A.I only
B.III only
C.I and II only
D.II and III only
E.I, II, and III
18) If Madison has a limit of 15,000 machine hours but no limit on direct labor hours,
then the ranking of the products from the most profitable to the least profitable use of
the constrained resource is:
A.A, B, C
B.B, C, A
C.A, C, B
D.C, A, B
19) Maraby Corporation’s inventory turnover for Year 2 was closest to:
A.11.2
B.7.8
C.9.4
D.13.5
20) Keefe Corporation has two divisions: Western Division and Eastern 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.
What is the company’s overall net operating income if it operates at the break-even
points for its two divisions?
A.$17,160
B.$(75,240)
C.$(228,240)
D.$0