1) (ignore income taxes in this problem.) how is depreciation handled by the following
capital budgeting techniques?
a.choice a
b.choice b
c.choice c
d.choice d
2) hurst co. manufacturers and sells a single product. price and cost data regarding this
product are as follows:
in the current year, the company sold 43,000 units. due to competition, management
will be forced to lower the selling price by 10% next year. how many units must be sold
next year to earn the same income as was earned in the current year?
a.50,000 units
b.53,200 units
c.58,800 units
d.60,200 units
3) management of berndt corporation has asked your help as an intern in preparing
some key reports for august. the beginning balance in the raw materials inventory
account was $33,000. during the month, the company made raw materials purchases
amounting to $62,000. at the end of the month, the balance in the raw materials
inventory account was $30,000. direct labor cost was $46,000 and manufacturing
overhead was $74,000. the beginning balance in the work in process account was
$13,000 and the ending balance was $19,000. the beginning balance in the finished
goods account was $54,000 and the ending balance was $50,000. sales totaled
$270,000. selling expense was $18,000 and administrative expense was $49,000.
the cost of goods manufactured for august was:
a.$191,000
b.$185,000
c.$182,000
d.$179,000
4) which one of the following would increase the working capital of a company?
a.cash payment of payroll taxes payable
b.refinancing a short-term note payable with a two year note payable
c.cash collection of accounts receivable
d.payment of a 20-year mortgage payable with cash
5) dowlen corporation’s most recent balance sheet and income statement appear below:
dividends on common stock during year 2 totaled $60 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$10.74 per share.
required:
compute the following for year 2:
a. earnings per share (of common stock).
b. price-earnings ratio.
c. dividend payout ratio.
d. dividend yield ratio.
e. return on total assets.
f. return on common stockholders’ equity.
g. book value per share.
6) if a company’s bonds bear an interest rate of 8%, the tax rate is 30%, and the
company’s assets are generating an after-tax return of 7%, then the leverage would be:
a.positive
b.negative
c.neither positive or negative
d.impossible to determine without knowing the return on common stockholders’ equity
7) given the cost formula y = $12,000 + $6x, total cost at an activity level of 8,000 units
would be:
a.$20,000
b.$60,000
c.$12,000
d.$48,000
8) the management of zorrilla corporation is considering dropping product r10c. data
from the company’s accounting system appear below:
all fixed expenses of the company are fully allocated to products in the company’s
accounting system. further investigation has revealed that $42,000 of the fixed
manufacturing expenses and $48,000 of the fixed selling and administrative expenses
are avoidable if product r10c is discontinued.
according to the company’s accounting system, what is the net operating income earned
by product r10c?
a.($28,000)
b.$28,000
c.$135,000
d.($135,000)
9) at a sales volume of 37,000 units, bonham corporation’s property taxes (a cost that is
fixed with respect to sales volume) total $555,000.
to the nearest whole dollar, what should be the total property taxes at a sales volume of
34,900 units? (assume that this sales volume is within the relevant range.)
a.$539,250
b.$588,395
c.$523,500
d.$555,000
10) dorra corporation manufactures lawnmowers in five work stations. dorra’s weekly
demand is 5,000 mowers but dorra can only produce 4,200. according to the theory of
constraints, to increase production output dorra would benefit the most by concentrating
improvement efforts on the:
a.first work station
b.last work station
c.largest work station
d.fastest work station
e.slowest work station
11) on a cost-volume-profit graph, the break-even point is located:
a.at the origin
b.where the total revenue line intersects the volume axis
c.where the total expenses line intersects the dollars axis
d.where the total revenue line intersects the total expenses line
12) moravec company’s net income last year was $46,000 and cash dividends declared
and paid to the company’s stockholders totaled $18,000. changes in selected balance
sheet accounts for the year appear below:
based solely on this information, the net cash provided by operations under the indirect
method on the statement of cash flows would be:
a.$126,000
b.$74,000
c.$72,000
d.$18,000
13) yumm dairy corporation manufactures carrot-flavored ice cream. yumm’s
production budget indicated the following units to be produced for the upcoming
months:
four (4) ounces of carrots are needed for each gallon of ice cream. yumm also likes to
have enough carrots on hand to cover 5% of the next month’s production needs for
carrots. how many ounces of carrots should yumm plan on purchasing during the month
of february?
a.474,000 ounces
b.486,000 ounces
c.490,000 ounces
d.510,000 ounces
14) chabud 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 8,100 units were started and 7,300 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 70% complete with respect to materials and 40% 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.$332,037
b.$301,000
c.$309,000
d.$281,846
15) guynn corporation’s most recent balance sheet and income statement appear below:
dividends on common stock during year 2 totaled $10 thousand. dividends on preferred
stock totaled $5 thousand. the market price of common stock at the end of year 2 was
$7.05 per share.
the gross margin percentage for year 2 is closest to:
a.1054.5%
b.45.3%
c.82.9%
d.9.5%
16) (ignore income taxes in this problem.) cuarto corporation just invested in a project
that has an internal rate of return of 24%. this project is expected to generate $44,000 of
net cash inflows each year of its 6 year life. the project has no salvage value. what was
the initial investment required for this project?
a.$63,360
b.$72,600
c.$132,880
d.$160,000