1) Which one of the following statements about book value per share is most correct?
A.Market price per common share usually approximates book value per common share.
B.Book value per common share is based on past transactions whereas the market price
of a share of stock mainly reflects what investors expect to happen in the future.
C.A market price per common share that is greater than book value per common share
is an indication of an overvalued stock.
D.Book value per common share is the amount that would be paid to stockholders if the
company were sold to another company.
2) The unit product cost of product D00B under the activity-based costing system is
closest to:
A.$111.81
B.$133.82
C.$81.20
D.$30.61
The activity rates for each activity cost pool are computed as follows:
The overhead cost charged to Product D00B is:
3) What would be the total external failure cost appearing on the quality cost report?
A.$124,000
B.$524,000
C.$132,000
D.$245,000
4) Pardoe, Inc., manufactures a single product in which variable manufacturing
overhead is assigned on the basis of standard direct labor-hours. The company uses a
standard cost system and has established the following standards for one unit of
product:
During March, the following activity was recorded by the company:
The company produced 3,000 units during the month.
A total of 8,000 pounds of material were purchased at a cost of $23,000.
There was no beginning inventory of materials on hand to start the month; at the end of
the month, 2,000 pounds of material remained in the warehouse.
During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour.
Variable manufacturing overhead costs during March totaled $1,800.
The direct materials purchases variance is computed when the materials are purchased.
The labor efficiency variance for March is:
A.$5,040 U
B.$1,200 U
C.$1,200 F
D.$5,040 F
5) Easy Inc. uses the FIFO method in its process costing system. The following data
concern the operations of the company’s first processing department for a recent month.
Required:
Using the FIFO method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of units transferred out of the department during the month.
6) On November 1, Barnes Corporation has 8,000 units of Product A on hand. During
the month, the company plans to sell 30,000 units of Product A, and plans to have 6,500
units on hand at end of the month. How many units of Product A must be produced
during the month?
A.28,500
B.31,500
C.30,000
D.36,500
7) Longstaff Inc. has provided the following data for the month of March. There were
no beginning inventories; consequently, the direct materials, direct labor, and
manufacturing overhead applied listed below are all for the current month.
Manufacturing overhead for the month was overapplied by $5,000.
The Corporation allocates any underapplied or overapplied manufacturing overhead
among work in process, finished goods, and cost of goods sold at the end of the month
on the basis of the manufacturing overhead applied during the month in those accounts.
The journal entry to record the allocation of any underapplied or overapplied
manufacturing overhead for March would include the following:
A.debit to Work in Process of $13,650
B.debit to Work in Process of $500
C.credit to Work in Process of $13,650
D.credit to Work in Process of $500
8) Roskos Corporation has two divisions: Town Division and Country Division. The
following report is for the most recent operating period:
The company’s common fixed expenses total $52,900.
Required:
a. What is the Town Division’s break-even in sales dollars?
b. What is the Country Division’s break-even in sales dollars?
c. What is the company’s overall break-even in sales dollars?
9) Gierlach Beet Processors, Inc., processes sugar beets in batches. A batch of sugar
beets costs $27 to buy from farmers and $17 to crush in the company’s plant. Two
intermediate products, beet fiber and beet juice, emerge from the crushing process. The
beet fiber can be sold as is for $27 or processed further for $14 to make the end product
industrial fiber that is sold for $34. The beet juice can be sold as is for $32 or processed
further for $29 to make the end product refined sugar that is sold for $58. How much
profit (loss) does the company make by processing the intermediate product beet juice
into refined sugar rather than selling it as is?
A) $(47)
B) $(20)
C) $(3)
D) $(25)
10) Tansley Corporation has two products that use the same constrained resource–a
critical raw material.
The total amount of the constrained resource available is 9,500 grams.
Required:
a. Which product is most profitable, given the company’s constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?
d. The company is considering launching a new product whose variable cost is $167
and that requires 16 grams of the constrained resource. What is the minimum selling
price for the new product?
11) Werner Brothers, Inc., used the high-low method to derive its cost formula for
electrical power cost. According to the cost formula, the variable cost per unit of
activity is $2 per machine-hour. Total electrical power cost at the high level of activity
was $9,400 and at the low level of activity was $9,000. If the high level of activity was
2,200 machine hours, then the low level of activity was:
A) 1,800 machine hours
B) 1,900 machine hours
C) 2,000 machine hours
D) 1,700 machine hours
12) Farmington Corporation has provided the following production and total cost data
for two levels of monthly production volume. The company produces a single product.
The best estimate of the total cost to manufacture 6,300 units is closest to:
A) $1,162,350
B) $1,242,570
C) $1,222,515
D) $1,282,680
13) Sanes Corporation produces and sells a single product. Data concerning that
product appear below:
The unit sales to attain the company’s monthly target profit of $19,000 is closest to:
A.3,426
B.5,833
C.3,806
D.2,158
14) Zack Company has a current ratio of 2.5. What will be the effect of a purchase of
inventory with cash on the acid-test ratio and on working capital?
A.Option A
B.Option B
C.Option C
D.Option D