1) the following data pertain to harriman company’s operations during july:
the beginning work in process inventory was:
a.$10,000
b.$14,000
c.$1,000
d.$4,000
2) the following information is available on product a:
the company uses the absorption costing approach to cost-plus pricing described in the
text. based on these data, the total selling and administrative expenses each year would
be:
a.$240,000
b.$300,000
c.$140,000
d.$200,000
3) kirby, inc., manufactures a product with the following costs:
the company uses the absorption costing approach to cost-plus pricing described in the
text. the pricing calculations are based on budgeted production and sales of 19,000 units
per year.
the company has invested $580,000 in this product and expects a return on investment
of 14%.
the selling price based on the absorption costing approach would be closest to:
a.$74.30
b.$56.11
c.$96.50
d.$78.57
4) the management of matsuura corporation would like to set the selling price on a new
product using the absorption costing approach to cost-plus pricing. the company’s
accounting department has supplied the following estimates for the new product:
management plans to produce and sell 1,000 units of the new product annually. the new
product would require an investment of $254,000 and has a required return on
investment of 10%.
the unit target selling price using the absorption costing approach is closest to:
a.$122
b.$132
c.$99
d.$97
5) graney corporation uses an activity-based costing system with three activity cost
pools. the company has provided the following data concerning its costs and its activity
based costing system:
how much cost, in total, would be allocated in the first-stage allocation to the other
activity cost pool?
a.$143,000
b.$144,000
c.$108,000
d.$135,000
total other cost:
6) allocated common fixed costs:
a.can make a product line appear to be unprofitable
b.are always incremental costs
c.are always relevant in decisions involving dropping a product line
d.responses a, b, and c are all correct
7) noskey corporation’s budgeted total cash payments in july for inventory purchases
are:
a.$405,000
b.$283,500
c.$240,000
d.$168,000
8) variable expenses in store k totaled:
a.$70,000
b.$110,000
c.$200,000
d.$130,000
9) mcgann corporation is developing standards for its products. each unit of output of
the product requires 0.53 kilogram of a particular input. the allowance for waste and
spoilage is 0.06 kilogram of this input for each unit of output. the allowance for rejects
is 0.12 kilogram of this input for each unit of output. the standard quantity in kilograms
of this input per unit of output should be:
a.0.53
b.0.35
c.0.71
d.0.47
10) spettel corporation’s comparative balance sheet appears below:
the company’s net income (loss) for the year was $11,000 and its cash dividends were
$2,000.
which of the following classifications of changes in balance sheet accounts as sources
and uses is correct?
a.the change in accounts receivable is a use; the change in inventory is a use
b.the change in accounts receivable is a use; the change in inventory is a source
c.the change in accounts receivable is a source; the change in inventory is a source
d.the change in accounts receivable is a source; the change in inventory is a use
11) oran refiners, inc., processes sugar cane that it purchases from farmers. sugar cane
is processed in batches. a batch of sugar cane costs $76 to buy from farmers and $18 to
crush in the company’s plant. two intermediate products, cane fiber and cane juice,
emerge from the crushing process. the cane fiber can be sold as is for $21 or processed
further for $12 to make the end product industrial fiber that is sold for $43. the cane
juice can be sold as is for $47 or processed further for $21 to make the end product
molasses that is sold for $88.
how much profit (loss) does the company make by processing the intermediate product
cane juice into molasses rather than selling it as is?
a.($27)
b.($74)
c.$20
d.$2
12) data concerning plaxco corporation’s single product appear below:
the margin of safety as a percentage of sales is closest to:
a.65%
b.26%
c.74%
d.35%
13) kormos surgical hospital uses the direct method to allocate service department costs
to operating departments. the hospital has two service departments, telecommunications
and administration, and two operating departments, surgery and recovery.
telecommunications department costs are allocated on the basis of the number of
telecommunications ports in departments and administration department costs are
allocated on the basis of employees. the total surgery department cost after service
department allocations is closest to:
a.$485,219
b.$481,451
c.$476,168
d.$487,892
14) lucena corporation purchased a machine 7 years ago for $339,000 when it launched
product x05k. unfortunately, this machine has broken down and cannot be repaired. the
machine could be replaced by a new model 360 machine costing $353,000 or by a new
model 280 machine costing $332,000. management has decided to buy the model 280
machine. it has less capacity than the model 360 machine, but its capacity is sufficient
to continue making product x05k. management also considered, but rejected, the
alternative of dropping product x05k and not replacing the old machine. if that were
done, the $332,000 invested in the new machine could instead have been invested in a
project that would have returned a total of $426,000.
in making the decision to invest in the model 280 machine, the opportunity cost was:
a.$426,000
b.$353,000
c.$332,000
d.$339,000
15) (ignore income taxes in this problem.) the management of bischke corporation is
investigating an investment in equipment that would have a useful life of 8 years. the
company uses a discount rate of 16% in its capital budgeting. good estimates are
available for the initial investment and the annual cash operating outflows, but not for
the annual cash inflows and the salvage value of the equipment. the net present value of
the initial investment and the annual cash outflows is -$238,486.
ignoring the cash inflows, to the nearest whole dollar how large would the salvage
value of the equipment have to be to make the investment in the equipment financially
attractive?
a.$38,158
b.$781,921
c.$1,490,538
d.$238,486
16) guasson corporation uses the weighted-average method in its process costing
system. this month, the beginning inventory in the first processing department consisted
of 500 units. the costs and percentage completion of these units in beginning inventory
were:
a total of 6,400 units were started and 5,800 units were transferred to the second
processing department during the month. the following costs were incurred in the first
processing department during the month:
the ending inventory was 85% complete with respect to materials and 50% complete
with respect to conversion costs.
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
the cost per equivalent unit for materials for the month in the first processing
department is closest to:
a.$22.35
b.$20.59
c.$21.81
d.$21.10
17) jupiter inc. has provided the following data for the month of august. 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 underapplied by $2,000.
the company allocates any underapplied or overapplied overhead among work in
process, finished goods, and cost of goods sold at the end of the month on the basis of
the overhead applied during the month in those accounts.
the finished goods inventory at the end of august after allocation of any underapplied or
overapplied overhead for the month is closest to:
a.$33,540
b.$33,532
c.$34,580
d.$34,588
18) krepps corporation uses the weighted-average method in its process costing system.
data concerning the first processing department for the most recent month are listed
below:
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
the total cost transferred from the first processing department to the next processing
department during the month is closest to:
a.$410,402
b.$459,405
c.$436,300
d.$429,900
