1) How many units of product L06K should be produced each month?
A.975
B.500
C.0
D.175
2) Goldsmith Corporation has provided the following data:
The company’s net income in Year 2 was $24,400. The company’s book value per share
at the end of Year 2 is closest to:
A.$8.32 per share
B.$4.66 per share
C.$14.34 per share
D.$0.27 per share
3) 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.
If Red River can sell 15,000 bags annually to outside customers, according to the
formula in the text, what is the lowest acceptable transfer price from the viewpoint of
the selling division?
A.$20 per bag
B.$16 per bag
C.$11 per bag
D.$14 per bag
4) The total of the product costs listed above for September is:
A) $59,000
B) $366,000
C) $669,000
D) $303,000
5) Kisselburg Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $4,000. The market price of common
stock at the end of Year 2 was $5.75 per share.
6) Wienecke 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 44,000 units and sold 41,000 units. The company’s only product is sold for
$239 per unit.
Assume that the company uses an absorption costing system that assigns $16 of direct
labor cost and $70 of fixed manufacturing overhead to each unit that is produced. The
net operating income under this costing system is:
A.$1,066,000
B.$856,000
C.$544,000
D.$808,000
7) Gilson Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its budgets and performance reports. During April, the
company budgeted for 5,100 units, but its actual level of activity was 5,060 units. The
company has provided the following data concerning the formulas used in its budgeting
and its actual results for April:
Data used in budgeting:
Actual results for April:
The overall revenue and spending variance (i.e., the variance for net operating income
in the revenue and spending variance column on the flexible budget performance
report) for April would be closest to:
A.$2,538 F
B.$2,538 U
C.$1,910 F
D.$1,910 U
8) Which of the following variances is generally the least significant from the
standpoint of cost control?
A.Materials price variance.
B.Labor efficiency variance.
C.Fixed manufacturing overhead volume variance.
D.Variable overhead rate variance.
9) Clemmens Corporation has two major business segments: Consumer and
Commercial. Data for the segments and for the company for August appear below:
In addition, common fixed expenses totaled $265,000 and were allocated as follows:
$135,000 to the Consumer business segment and $130,000 to the Commercial business
segment.
A properly constructed segmented income statement in a contribution format would
show that the segment margin of the Consumer business segment is:
A.$152,000
B.$76,000
C.$17,000
D.$179,000
10) Given the following data:
The residual income would be:
A.$2,800
B.$0
C.$6,000
D.$8,000
11) Gutshall Corporation is considering a capital budgeting project that would involve
investing $240,000 in equipment with an estimated useful life of 4 years and no salvage
value at the end of the useful life. Annual incremental sales from the project would be
$580,000 and the annual incremental cash operating expenses would be $430,000. A
one-time renovation expense of $70,000 would be required in year 3. The project would
require investing $10,000 of working capital in the project immediately, but this amount
would be recovered at the end of the project in 4 years. The company’s income tax rate
is 30% and its after-tax discount rate is 13%.
The company uses straight-line depreciation on all equipment.
The income tax expense in year 3 is:
A.$6,000
B.$45,000
C.$21,000
D.$27,000
12) Lehnertz Corporation manufactures and sells a single product. The company uses
units as the measure of activity in its budgets and performance reports. During
February, the company budgeted for 7,100 units, but its actual level of activity was
7,150 units. The company has provided the following data concerning the formulas
used in its budgeting and its actual results for February:
Data used in budgeting:
Actual results for February:
The manufacturing overhead in the flexible budget for February would be closest to:
A.$43,323
B.$42,520
C.$42,580
D.$42,719