1) bakken corporation has provided the following production and average cost data for
two levels of monthly production volume. the company produces a single product.
the best estimate of the total variable manufacturing cost per unit is:
a.$16.50
b.$90.40
c.$45.50
d.$106.90
2) the manufacturing overhead budget of inch corporation is based on budgeted direct
labor-hours. the september direct labor budget indicates that 4,400 direct labor-hours
will be required in that month. the variable overhead rate is $5.00 per direct labor-hour.
the company’s budgeted fixed manufacturing overhead is $59,400 per month, which
includes depreciation of $10,560. all other fixed manufacturing overhead costs
represent current cash flows.
required:
a. determine the cash disbursement for manufacturing overhead for september. show
your work!
b. determine the predetermined overhead rate for september. show your work!
3) juncker corporation’s most recent balance sheet and income statement appear below:
the debt-to-equity ratio at the end of year 2 is closest to:
a.0.24
b.0.05
c.0.09
d.0.26
4) hofbauer corporation’s two products have the following characteristics:
the constrained resource is a particular machine that is available for 10,400 minutes
each month. each unit of product m73o requires 6 minutes on this machine and each
unit of product m26b requires 8 minutes on this machine.
how many units of product m26b should be produced each month?
a.0
b.280
c.2,000
d.980
5) if a company converts a short-term note payable into a long-term note payable, this
transaction would:
a.decrease working capital and increase the current ratio
b.decrease working capital and decrease the current ratio
c.decrease the current ratio and decrease the acid-test ratio
d.increase working capital and increase the current ratio
6) henscheid corporation leases its corporate headquarters building. this lease cost is
fixed with respect to the company’s sales volume. in a recent month in which the sales
volume was 33,000 units, the lease cost was $283,800.
to the nearest whole cent, what should be the average lease cost per unit at a sales
volume of 31,600 units in a month? (assume that this sales volume is within the
relevant range.)
a.$8.04
b.$8.98
c.$8.79
d.$8.60
7) the master budget process usually begins with the:
a.production budget
b.operating budget
c.sales budget
d.cash budget
8) mcmackin corporation had $35,000 of raw materials on hand on august 1. during the
month, the company purchased an additional $66,000 of raw materials. during august,
$81,000 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. the debits to the work in process account as a consequence of the raw
materials transactions in august total:
a.$66,000
b.$0
c.$74,000
d.$81,000
9) penna corporation produces a single product and has the following cost structure:
required:
a. compute the unit product cost under absorption costing. show your work!
b. compute the unit product cost under variable costing. show your work!
10) cahin corporation applies manufacturing overhead on the basis of machine-hours. at
the beginning of the most recent year, the company based its predetermined overhead
rate on total estimated overhead of $21,060. actual manufacturing overhead for the year
amounted to $13,000 and actual machine-hours were 1,380. the company’s
predetermined overhead rate for the year was $16.20 per machine-hour.
the predetermined overhead rate was based on how many estimated machine-hours?
a.1,380
b.802
c.225
d.1,300
11) lifsey wedding fantasy company makes very elaborate wedding cakes to order. the
owner of the company has provided the following data concerning the activity rates in
its activity-based costing system:
the measure of activity for the size-related activity cost pool is the number of planned
guests at the wedding reception. the greater the number of guests, the larger the cake.
the measure of complexity is the number of tiers in the cake. the activity measure for
the order-related cost pool is the number of orders. (each wedding involves one order.)
the activity rates include the costs of raw ingredients such as flour, sugar, eggs, and
shortening. the activity rates do not include the costs of purchased decorations such as
miniature statues and wedding bells, which are accounted for separately.
data concerning two recent orders appear below:
assuming that the company charges $556.96 for the smith wedding cake, what would be
the overall margin on the order?
a.$152.45
b.$96.66
c.$460.30
d.$165.41
12) in december, one of the processing departments at stiel corporation had ending
work in process inventory of $38,000. during the month, $119,000 of costs were added
to production and the cost of units transferred out from the department was $92,000.
in the department’s cost reconciliation report for september, the cost of units transferred
out of the department would be:
a.$166,000
b.$185,000
c.$147,000
d.$151,000
13) kava inc. manufactures industrial components. one of its products, which is used in
the construction of industrial air conditioners, is known as k65. data concerning this
product are given below:
the above per unit data are based on annual production of 4,000 units of the component.
direct labor can be considered to be a variable cost.
source: cma, adapted
the company has received a special, one-time-only order for 500 units of component
k65. there would be no variable selling expense on this special order and the total fixed
manufacturing overhead and fixed selling and administrative expenses of the company
would not be affected by the order. however, assume that kava has no excess capacity
and this special order would require 10 minutes of the constraining resource, which
could be used instead to produce products with a total contribution margin of $11,000.
what is the minimum price per unit on the special order below which the company
should not go?
a.$60
b.$81
c.$100
d.$22
14) the management of haigler corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. the company’s controller
has provided an example to illustrate how this new system would work. in this example,
the allocation base is machine-hours and the estimated amount of the allocation base for
the upcoming year is 64,000 machine-hours. in addition, capacity is 80,000
machine-hours and the actual level of activity for the year is 66,300 machine-hours. all
of the manufacturing overhead is fixed and is $3,788,800 per year. for simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity. it is further assumed that this is also the actual
amount of manufacturing overhead for the year.
if the company bases its predetermined overhead rate on the estimated amount of the
allocation base for the upcoming year, by how much was manufacturing overhead
underapplied or overapplied?
a.$648,832 overapplied
b.$648,832 underapplied
c.$136,160 overapplied
d.$136,160 underapplied