1) If a company has computed a project profitability index of -0.015 for an investment
project, then:
A.the project’s internal rate of return is less than the discount rate.
B.the project’s internal rate of return is greater than the discount rate.
C.the project’s internal rate of return is equal to the discount rate.
D.the relationship of the internal rate of return and the discount rate is impossible to
determine from the data given.
2) Hairston Corporation manufactures and sells a single product. The company uses
units as the measure of activity in its budgets and performance reports. During
November, the company budgeted for 7,700 units, but its actual level of activity was
7,720 units. The company has provided the following data concerning the formulas
used in its budgeting and its actual results for November:
Data used in budgeting:
Actual results for November:
The selling and administrative expenses in the planning budget for November would be
closest to:
A.$22,144
B.$21,104
C.$22,140
D.$21,049
3) The net cash provided by (used in) investing activities for the year was:
A.$72
B.$104
C.$(104)
D.$(72)
4) The payback period for the investment is closest to:
A.0.2 years
B.2.5 years
C.4.8 years
D.5.0 years
5) Zike Corporation’s static planning budget for October appears below. The company
bases its budgets on machine-hours.
In October, the actual number of machine-hours was 6,000, the actual supplies cost was
$14,740, the actual power cost was $49,170, the actual salaries cost was $15,390, and
the actual equipment depreciation was $63,670.
The spending variance for power cost in the flexible budget performance report for the
month should be:
A.$3,570 U
B.$1,170 U
C.$3,570 F
D.$1,170 F
6) The net present value of the alternative of overhauling the present system is closest
to:
A.$(238,232)
B.$(108,000)
C.$(228,232)
D.$(232,272)
7) Petroski Natural Dying Corporation measures its activity in terms of skeins of yarn
dyed. Last month, the budgeted level of activity was 19,700 skeins and the actual level
of activity was 19,900 skeins. The company’s owner budgets for dye costs, a variable
cost, at $0.67 per skein. The actual dye cost last month was $13,910. In the company’s
flexible budget performance report for last month, what would have been the spending
variance for dye costs?
A.$134 U
B.$577 U
C.$711 U
D.$140 U
8) The times interest earned ratio of Whitney Corporation is 3.0. The interest expense
for the year is $21,000, and the corporation’s tax rate is 40%. The corporation’s after-tax
net income must be:
A.$63,000
B.$25,200
C.$30,000
D.$42,000
9) The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What is the materials quantity variance for the month?
A.$13,720 U
B.$6,732 F
C.$13,860 U
D.$6,664 F
10) Bard Hotel bases its budgets on guest-days. The hotel’s static budget for January
appears below:
The total variable cost at the activity level of 10,200 guest-days per month should be:
A.$123,420
B.$99,960
C.$94,080
D.$116,160
11) For this investment, the simple rate of return to the nearest tenth of a percent is:
A.43.7%
B.25.3%
C.30.4%
D.17.6%
12) The company’s net profit margin percentage for Year 2 is closest to:
A.37.3%
B.2.6%
C.1.4%
D.0.9%
13) Mussenden Corporation has an activity-based costing system with three activity
cost pools-Machining, Order Filling, and Other. In the first stage allocations, costs in
the two overhead accounts, equipment depreciation and supervisory expense, are
allocated to three activity cost pools based on resource consumption. Data used in the
first stage allocations follow:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling
costs are assigned to products using the number of orders. The costs in the Other
activity cost pool are not assigned to products. Activity data for the company’s two
products follow:
What is the overhead cost assigned to Product S4 under activity-based costing?
A.$18,688
B.$3,570
C.$24,500
D.$22,258