1) All of the following are examples of cash outflows from an investing activity except
A) purchase of equity securities
B) loans made to another party
C) purchase of commercial real estate
D) purchase of treasury stock
2) The following information was gathered for the Wesley Corporation for the most
recent year. Manufacturing overhead is allocated using direct labor hours.
What amount of manufacturing overhead would be allocated for the year?
A) $1,255,875
B) $1,071,000
C) $ 985,000
D) $ 840,000
3) Of the following, which is not a cash inflow from a financing activity?
A) Issuance of preferred stock
B) Issuance of common stock
C) Sale of long-term investment
D) Proceeds from issuance of long-term debt
4) The format of the “cost of goods sold, inventory, and purchases” budget is as follows:
A) desired ending inventory + beginning inventory – cost of goods sold
B) cost of goods sold + desired ending inventory – beginning inventory
C) cost of goods sold – desired ending inventory + beginning inventory
D) desired ending inventory – beginning inventory – cost of goods sold
5) I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road,
Peanut Butter, and Fruity Tooty. It sold 15,000 gallons last year. For every five gallons
of ice cream sold, one pound is Fruity Tooty and the remainder is split evenly between
Peanut Butter and Rocky Road. Fixed costs for I Scream For Ice Cream are $27,000
and additional information follows:
The weighted average contribution margin per pound for the three products of I Scream
For Ice Cream is
A) $50.00
B) $ 0.65
C) $ 7.00
D) $ 2.00
6) The Bedford Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the rate of return on total assets for the current year?
A) 34.40%
B) 37.49%
C) 30.17%
D) 0.53%
7) The following account balances at the beginning of January were selected from the
general ledger of Ocean City Manufacturing Company:
Additional data:
1> Actual manufacturing overhead for January amounted to $62,000.
2> Total direct labor cost for January was $63,000.
3> The predetermined manufacturing overhead rate is based on direct labor cost. The
budget for the year called for $250,000 of direct labor cost and $350,000 of
manufacturing overhead costs.
4> The only job unfinished on January 31 was Job No. 151, for which total direct labor
charges were $5,200 (800 direct labor hours) and total direct material charges were
$14,000.
5> Cost of direct materials placed in production during January totaled $123,000. There
were no indirect material requisitions during January.
6> January 31 balance in raw materials inventory was $35,000.
7> Finished goods inventory balance on January 31 was $34,500.
What is the work in process inventory balance on January 31?
A) $ 7,280
B) $ 22,914
C) $ 26,480
D) $ 50,914
8) Dursley & Marvolo, Attorneys at Law, provide a variety of legal services. The law
firm uses an activity-based costing system and has developed the following activity
pool cost rates:
Cost and activity data related to two clients is as follows:
How much overhead cost would be allocated to Client 82 using the activity-based
costing system?
A) $ 709
B) $ 9,626
C) $ 2,721
D) $ 32,614
9) Garfield Corporation is considering building a new plant in Canada. It predicts sales
at the new plant to be 50,000 units at $5.00/unit. Below is a listing of estimated
expenses:
A Canadian firm was contracted to sell the product and will receive a commission of
10% of the sales price. No U.S. home office expenses will be allocated to the new
facility.
The margin of safety percentage for Duncan Enterprises is
A) 89.53%
B) 35.71%
C) 164.29%
D) 64.29%
10) The following information relates to Truman Unlimited for the past two years.
The book value per share of common stock for the current year is
A) $52.77
B) $79.50
C) $13.50
D) $96.00
11) When calculating the total amount of manufacturing overhead to allocate to a
particular job, the company would multiply each departmental overhead rate by
________ and then ________ together the allocated amounts from each department.
A) the actual amount of the departmental allocation based used by the job; multiply
B) the actual amount of the plantwide allocation based used by the job; add
C) the actual amount of the departmental allocation based used by the job; add
D) the actual amount of the plantwide allocation based used by the job; multiply
12) Regis Corporation wants to know how closely its current cost driver is correlated
with its monthly operating costs. The managerial accountant runs a regression analysis
using a statistical software program and produces the following data:
Intercept Coefficient = 12,200,567
X Variable 1 Coefficient = 95.65
R-square = 0.8574
What is the Regis Corporation’s monthly cost equation?
A) y = $95.65x + $8,574
B) y = $95.65x + $12,200,567
C) y = $12,200,567x + $8,574
D) y = $0.8574x + $12,200,567
13) How is the cost of direct materials used in production recorded?
A) Debit to manufacturing overhead
B) Debit to raw materials inventory
C) Debit to work in process inventory
D) Debit to direct materials expense
14) Direct labor for a company was $145,000; manufacturing overhead was $300,000;
and direct materials were $270,000. Conversion costs would total
A) $570,000
B) $715,000
C) $415,000
D) $445,000
15) When making a decision to buy a new computer, all of the following should be
considered except
A) differential costs
B) relevant costs
C) qualitative characteristics
D) sunk costs
16) Assuming no other changes in the cost-volume-profit relationship, which of the
following will decrease the breakeven point in units?
A) A decrease in the selling price per unit
B) An increase in the selling price per unit
C) An increase in total fixed costs
D) An increase in the variable costs per unit
17) Fabian Fabrication machines heavy-duty brake rotors that are used on commercial
airliners. Fabian’s management developed the following standard costs:
Actual activity for October:
What is the variable manufacturing overhead efficiency variance for October?
A) $17,550 unfavorable
B) $8,550 unfavorable
C) $17,550 favorable
D) $8,550 favorable
18) For a manufacturer, beginning work in process would be equal to
A) manufacturing costs incurred in the period – ending work in process inventory
B) cost of goods manufactured – ending work in process inventory + manufacturing
costs incurred in the period
C) ending work in process inventory + manufacturing costs incurred in the period
D) cost of goods manufactured + ending work in process inventory – manufacturing
costs incurred in the period
19) XBRL can best be described as a
A) new set of auditing standards
B) new set of accounting standards
C) new set of ethical standards
D) a tagging system for financial statement data
20) Kramer Company manufactures coffee tables and uses an activity-based costing
system to allocate all manufacturing conversion costs. Each coffee table consists of 20
separate parts totaling $240 in direct materials, and requires 5.0 hours of machine time
to produce. Additional information follows:
What is the number of finished coffee tables?
A) 20
B) 100
C) 250
D) Cannot be determined from the information given
21) Conversion costs consist of
A) direct materials and direct labor
B) direct labor and manufacturing overhead
C) direct materials and manufacturing overhead
D) direct materials, direct labor and manufacturing overhead
22) Dairy Days Ice Cream sells ice cream cones for $4 per customer. Variable costs are
$3 per cone. Fixed costs are $2,500 per month. What is Dairy Days’ contribution margin
ratio?
A) 267%
B) 25%
C) 2%
D) 63%
23) The ________ is the difference in dollars between amounts in the static budget and
the flexible budget.
A) flexible budget variance
B) static budget variance
C) sales volume variance
D) actual variance
24) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to current liabilities?
A) Current liabilities saw a 30% increase from the prior year to the current year
B) Current liabilities are 11.77% of total capital
C) The current ratio is 1.06
D) Current liabilities saw a 76.92% increase from the prior year to the current year
25) The entry to record the purchase of raw materials on account using a job costing
system would include a
A) credit to work in process inventory
B) debit to accounts payable
C) debit to work in process inventory
D) debit to raw materials inventory
26) Desired ending inventory is 20% of next month’s sales. If cost of goods sold is
$300,000 and next month’s sales is $900,000, which of the following statements is
TRUE regarding purchases?
A) Purchases will be more than cost of goods sold
B) Purchases cannot be predicted from the information given
C) Purchases will be less than cost of goods sold
D) Purchases will equal cost of goods sold
27) The Sarbanes-Oxley Act allows for a maximum of ________ years of imprisonment
for knowingly destroying or creating documents to obstruct any federal investigation.
A) 20
B) 15
C) 10
D) 5
28) The ________ is a budget based on multiple levels of projected sales or production.
A) standard budget
B) flexible budget
C) static budget
D) fixed budget
29) Tall Timbers reports the following data for its first year of operation.
What is the cost of goods sold?
A) $65,000
B) $85,000
C) $117,000
D) $115,000
30) A drug store decides to discontinue its health and beauty section of products
because it has been unprofitable. This strategy could backfire because
A) the store can readily fill the available space
B) the store’s sales may suffer by not having this convenience category of products
C) it has automatically saved that department’s fixed costs
D) none of the above
31) To follow is selected information about The Boston Company for the current year
and prior year.
What is the current year’s income tax percentage (as would be found on a vertical
analysis of the income statement for the current year)?
A) 4.00%
B) 13.68%
C) 113.68%
D) 4.36%
32) Channel One Industries uses a standard costing system to apply manufacturing
costs to its production process. In May, Channel One anticipated producing 2,450 units
with fixed manufacturing overhead costs allocated at $7.40 per direct labor hour with a
standard of 1.5 direct labor hours per unit. In May, actual production was 3,200 units
and actual fixed manufacturing overhead costs were $23,000.
What was Channel One’s fixed manufacturing overhead budget variance for May?
A) $4,195 favorable
B) $4,195 unfavorable
C) $8,325 favorable
D) $8,325 unfavorable