1) ermoin corporation uses the weighted-average method in its process costing system.
this month, the beginning inventory in the first processing department consisted of 600
units. the costs and percentage completion of these units in beginning inventory were:
a total of 5,700 units were started and 4,700 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 75% complete with respect to materials and 20% 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 total cost transferred from the first processing department to the next processing
department during the month is closest to:
a.$265,800
b.$242,055
c.$324,456
d.$251,700
2) sibrel inc., a manufacturing company, has provided the following financial data for
september:
the company had no beginning or ending inventories.
required:
a. prepare an income statement in good form for september using the traditional
approach.
b. prepare an income statement in good form for september using the contribution
approach.
3) the tate company uses a standard costing system in which manufacturing overhead is
applied on the basis of standard direct labor-hours (dlhs). the company recorded the
following costs and activity for september:
the amount of fixed manufacturing overhead cost contained in the company’s flexible
budget for manufacturing overhead for september was:
a.$61,400
b.$57,000
c.$60,000
d.$58,550
4) a project profitability index greater than zero for a project indicates that:
a.the discount rate is less than the internal rate of return
b.there has been a calculation error
c.the project is unattractive and should not be pursued
d.the company should reevaluate its discount rate
5) galimba corporation, which produces commercial windows, has provided the
following data:
the variable overhead rate variance for supplies is closest to:
a.$5,153 u
b.$6,611 u
c.$5,153 f
d.$6,611 f
6) the management of dorl corporation has been concerned for some time with the
financial performance of its product i54j and has considered discontinuing it on several
occasions. data from the company’s accounting system appear below:
in the company’s accounting system all fixed expenses of the company are fully
allocated to products. further investigation has revealed that $95,000 of the fixed
manufacturing expenses and $85,000 of the fixed selling and administrative expenses
are avoidable if product i54j is discontinued.
according to the company’s accounting system, what is the net operating income earned
by product i54j?
a.$14,000
b.($357,000)
c.($14,000)
d.$357,000
7) the april contribution format income statement of iannacone corporation appears
below:
the april contribution format income statement of iannacone corporation appears below:
if the company’s sales increase by 1%, its net operating income should increase by
about:
a.9%
b.1%
c.4%
d.11%
8) selected data from sheridan corporation’s year-end financial statements are presented
below. the difference between average and ending inventory is immaterial.
sheridan’s sales for the year were:
a.$800,000
b.$480,000
c.$1,200,000
d.$240,000
9) the apoundright company uses standard costing and has established the following
standards for its single product:
direct materials: 2 gallons at $3 per gallon
direct labor: 0.5 hours at $8 per hour
variable overhead: 0.5 hours at $2 per hour
during november, the company made 4,000 units and incurred the following costs:
direct materials purchased: 8,100 gallons at $3.10 per gallon
direct materials used: 7,600 gallons
direct labor used: 2,200 hours at $8.25 per hour
actual variable overhead: $4,175
the company applies variable overhead to products on the basis of standard direct
labor-hours.
the labor rate variance for november was:
a.$1,050 u
b.$550 u
c.$2,150 u
d.$2,150 f
10) (ignore income taxes in this problem.) the becker company is interested in buying a
piece of equipment that it needs. the following data have been assembled concerning
this equipment:
this equipment is expected to have a useful life of 6 years. at the end of the sixth year
the working capital would be released for use elsewhere. the company’s discount rate is
10%.
the present value of the net cash flows (all cash inflows less all cash outflows)
occurring during year 4 is:
a.$40,000
b.$27,320
c.$54,640
d.$42,790
11) an outdoor barbecue grill manufacturer has a standard costing system based on
standard direct labor-hours (dlhs) as the measure of activity. data from the company’s
flexible budget for manufacturing overhead are given below:
the following data pertain to operations for the most recent period:
what was the fixed manufacturing overhead budget variance for the period to the
nearest dollar?
a.$806 u
b.$700 u
c.$1,970 f
d.$1,195 f
12) boulay corporation has two operating divisions-a north division and a south
division. the company’s logistics department services both divisions. the variable costs
of the logistics department are budgeted at $34 per shipment. the logistics department’s
fixed costs are budgeted at $175,000 for the year. the fixed costs of the logistics
department are determined based on peak-period demand.
at the end of the year, actual logistics department variable costs totaled $147,840 and
fixed costs totaled $189,610. the north division had a total of 2,100 shipments and the
south division had a total of 2,100 shipments for the year.
required:
a. prepare a report showing how much of the logistics department’s costs should be
charged to each of the operating divisions at the end of the year.
b. how much of the actual logistics department costs should not be charged to the
operating divisions at the end of the year? who should be held responsible for these
uncharged costs?
13) guilbault midwifery’s cost formula for its wages and salaries is $2,340 per month
plus $154 per birth. for the month of june, the company planned for activity of 115
births, but the actual level of activity was 112 births. the actual wages and salaries for
the month was $19,530. the wages and salaries in the planning budget for june would be
closest to:
a.$19,530
b.$19,588
c.$20,053
d.$20,050
14) a company currently sells products aye, bee, and cee in equal quantities and at the
same selling price per unit. the contribution margin ratio for product aye is 40%, for
product bee is 50%, and the overall contribution margin ratio for the company is 48%.
suppose that the sales mix changes to 40% aye, 25% bee, and 35% cee, what would be
the new overall contribution margin ratio for the company?
a.27.5%
b.45.3%
c.47.4%
d.68.4%
15) how much of the actual fixed maintenance cost for the year should be kept in the
maintenance department and not charged to the other departments for performance
evaluation purposes?
a.$0
b.$308,000
c.$28,000
d.$280,000
16) felux corporation has provided the following data for october.
required:
a. compute the budget variance for october. show your work!
b. compute the volume variance for october. show your work!
17) fickling corporation has two operating divisions-a consumer division and a
commercial division. the company’s order fulfillment department provides services to
both divisions. the variable costs of the order fulfillment department are budgeted at
$51 per order. the order fulfillment department’s fixed costs are budgeted at $484,000
for the year. the fixed costs of the order fulfillment department are budgeted based on
the peak period orders.
at the end of the year, actual order fulfillment department variable costs totaled
$460,404 and fixed costs totaled $493,700. the consumer division had a total of 2,430
orders and the commercial division had a total of 6,390 orders for the year.
how much actual order fulfillment department cost should not be allocated to the
operating divisions at the end of the year?
a.$20,284
b.$0
c.$10,584
d.$9,700
18) eccles corporation uses a job-order costing system and applies overhead to jobs
using a predetermined overhead rate. during the year the company’s finished goods
inventory account was debited for $384,000 and credited for $325,900. the ending
balance in the finished goods inventory account was $72,100. at the end of the year,
manufacturing overhead was underapplied by $5,400.
the balance in the finished goods inventory account at the beginning of the year was:
a.$72,100
b.$5,400
c.$14,000
d.$58,100
19) loehr corporation’s management reports that its average delivery cycle time is 14.0
days, its average throughput time is 6.3 days, its manufacturing cycle efficiency (mce)
is 0.27, its average move time is 0.1 day, and its average queue time is 3.9 days.
required:
a. what is the wait time?
b. what is the process time?
c. what is the inspection time?
20) holding all other things constant, if the unit sales increase, then the markup under
absorption costing will:
a.increase
b.decrease
c.remain the same
d.the effect cannot be determined