1) How much Maintenance Department cost should be allocated to the Stains Division
at the end of the year?
A.$900,532
B.$924,994
C.$858,220
D.$882,420
2) The unit product cost of product R21V under the company’s traditional costing
system is closest to:
Pacchiana Manufacturing Corporation has a traditional costing system in which it
applies manufacturing overhead to its products using a predetermined overhead rate
based on direct labor-hours (DLHs). The company has two products, R21V and D00B,
about which it has provided the following data:
The company’s estimated total manufacturing overhead for the year is $1,262,880 and
the company’s estimated total direct labor-hours for the year is 36,000.
The company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. Data for this proposed activity-based costing
system appear below:
A.$34.02
B.$24.40
C.$41.36
D.$23.50
3) Which of the following entries would record correctly the monthly salaries earned by
the top management of a manufacturing company?
A.Option A
B.Option B
C.Option C
D.Option D
4) A study has been conducted to determine if one of the departments in Barry
Corporation should be discontinued. The contribution margin in the department is
$60,000 per year. Fixed expenses charged to the department are $75,000 per year. It is
estimated that $34,000 of these fixed expenses could be eliminated if the department is
discontinued. These data indicate that if the department is discontinued, the company’s
overall net operating income would:
A) decrease by $26,000 per year
B) increase by $26,000 per year
C) decrease by $15,000 per year
D) increase by $15,000 per year
5) Holding all other things constant, an increase in the company’s required return on
investment (ROI) will affect:
A.the selling price under the absorption costing approach to cost-plus pricing.
B.the profit-maximizing price.
C.both the selling price under the absorption costing approach to cost-plus pricing and
the profit-maximizing price.
D.neither the selling price under the absorption costing approach to cost-plus pricing
nor the profit-maximizing price.
6) Bohlen Corporation produces and sells a single product. Data concerning that
product appear below:
Fixed expenses are $716,000 per month. The company is currently selling 6,000 units
per month. Consider each of the following questions independently.
The marketing manager believes that a $20,000 increase in the monthly advertising
budget would result in a 180 unit increase in monthly sales. What should be the overall
effect on the company’s monthly net operating income of this change?
A.decrease of $5,920
B.increase of $5,920
C.decrease of $20,000
D.increase of $25,920
7) Blue Corporation’s standards call for 2,500 direct labor-hours to produce 1,000 units
of product. During May 900 units were produced and the company worked 2,400 direct
labor-hours. The standard hours allowed for May production would be:
A.2,500 hours
B.2,400 hours
C.2,250 hours
D.1,800 hours
8) Trapp Corporation uses the weighted-average method in its process costing system.
The beginning work in process inventory in its Painting Department consisted of 3,000
units that were 70% complete with respect to materials and 60% complete with respect
to conversion costs. The cost of the beginning work in process inventory in the
department was recorded as $10,000. During the period, 9,000 units were completed
and transferred on to the next department. The costs per equivalent unit for the period
were $2.00 for material and $3.00 for conversion costs. The cost of units transferred out
during the month was:
A.$39,600
B.$45,000
C.$45,400
D.$35,400
9) Moffa Corporation manufactures and sells one product. The following information
pertains to the company’s first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 54,000 units and sold 47,000 units. The company’s only product is sold for
$256 per unit.
The unit product cost under super-variable costing is:
A.$93 per unit
B.$171 per unit
C.$107 per unit
D.$219 per unit
10) The company’s price-earnings ratio for Year 2 is closest to:
A.3.79
B.10.58
C.0.17
D.7.44
11) Dilbert Farm Supply is located in a small town in the rural west. Data regarding the
store’s operations follow:
Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000
for January.
Collections are expected to be 80% in the month of sale, 19% in the month following
the sale, and 1% uncollectible.
The cost of goods sold is 65% of sales.
The company desires to have an ending merchandise inventory at the end of each
month equal to 60% of the next month’s cost of goods sold. Payment for merchandise is
made in the month following the purchase.
Other monthly expenses to be paid in cash are $20,300.
Monthly depreciation is $20,000.
Ignore taxes.
The cash balance at the end of December would be:
A.$180,500
B.$153,500
C.$82,800
D.$27,000
12) The income tax expense in year 3 is:
A.$9,000
B.$30,000
C.$39,000
D.$60,000
13) Narstad Corporation’s debt-to-equity ratio at the end of Year 2 was closest to:
A.0.50
B.0.36
C.0.19
D.0.17
14) Assume that Quilt was being evaluated solely on the basis of residual income.
Which of the following investment opportunities would Quilt want to invest in?
A.Option A
B.Option B
C.Option C
D.Option D
15) The following data pertains to activity and maintenance cost for two recent periods:
Maintenance cost is a mixed cost with both fixed and variable components. Using the
high-low method, the cost formula for maintenance cost is:
A) Y = $8,000 + $1.75 X
B) Y = $3.75 X
C) Y = $1,750 + $3.35 X
D) Y = $3.35 X
16) The constraint at Mirsch Inc. is a key raw material. A total of 9,600 ounces of this
constrained resource are available. Data concerning the company’s two products, B01
and P46, appear below:
Each unit of product B01 requires 9 ounces of the constrained raw material; each unit of
product P46 requires 12 ounces.
Required:
a. In the present circumstances, which product is most profitable?
b. How much of each product should be produced?
c. The company is considering launching a new product whose variable cost is $210
and that requires 9 ounces of the constrained resource. What is the minimum acceptable
selling price for the new product?
17) Abbe Corporation uses activity-based costing. The company makes two products:
Product A and Product B. The annual production and sales of Product A is 800 units and
of Product B is 600 units. There are three activity cost pools, with total cost and activity
as follows:
The activity rate for Activity 2 is closest to:
A.$11.76
B.$8.69
C.$29.27
D.$33.31
18) Leflore Corporation has provided the following data:
Dividends on common stock during Year 2 totaled $6,000. The market price of common
stock at the end of Year 2 was $1.38 per share. The company’s dividend yield ratio for
Year 2 is closest to:
A.4.3%
B.1.2%
C.35.0%
D.50.0%
19) Paulson Corporation uses a predetermined overhead rate based on machine-hours to
apply manufacturing overhead to jobs. The Corporation has provided the following
estimated costs for next year:
Paulson estimated that 40,000 direct labor-hours and 20,000 machine-hours would be
worked during the year. The predetermined overhead rate per machine-hour will be:
A.$1.60
B.$2.10
C.$1.00
D.$1.05
20) The following data have been recorded for recently completed Job 323 on its job
cost sheet. Direct materials cost was $2,260. A total of 37 direct labor-hours and 141
machine-hours were worked on the job. The direct labor wage rate is $13 per
labor-hour. The Corporation applies manufacturing overhead on the basis of
machine-hours. The predetermined overhead rate is $14 per machine-hour. The total
cost for the job on its job cost sheet would be:
A.$3,259
B.$2,741
C.$4,715
D.$2,287
