1) Evita Corporation prepares its statement of cash flows using the indirect method.
Evita’s statement showed “Net cash provided by operating activities” of $46,000. Under
the direct method, this number would have been:
A.$0.
B.$46,000.
C.greater than $46,000.
D.less than $46,000 but greater than $0.
2) The company’s equity multiplier at the end of Year 2 is closest to:
A.0.69
B.2.23
C.0.45
D.1.45
3) The working capital at the end of Year 2 is:
A.$600
B.$1,000
C.$880
D.$240
4) Carlton Corporation sells a single product at a selling price of $40 per unit. Variable
expenses are $22 per unit and fixed expenses are $82,800. Carlton’s break-even point is:
A.4,600 units
B.3,764 units
C.5,000 units
D.2,070 units
5) What is the total amount of the costs listed above that are direct costs of the
Cosmetics Department?
A) $83,000
B) $94,000
C) $90,000
D) $127,000
6) The prime cost for December was:
A) $129,000
B) $115,000
C) $109,000
D) $62,000
7) Layton Company operates a free day-care center for the benefit of its employees. The
company subsidizes the day-care center heavily and charges only a very nominal fee to
employees using the center services. Budgeted and actual costs in the day-care center
for the most recent year are as follows:
The variable costs of the day-care center are charged to operating departments on the
basis of employees in their departments. Data concerning these operating departments
follow:
The level of budgeted fixed costs in the day-care center is determined by the
peak-period requirements.
Required:
a. Compute the dollar amount of the variable and fixed costs that should have been
charged to each of the operating departments at the end of the year for purposes of
evaluating performance.
b. Identify the amount, if any, of actual costs that should not be charged to the operating
departments for performance evaluation purposes.
8) Cybil Baunt just inherited a 1958 Chevy Impala from her late Aunt Joop. Aunt Joop
purchased the car 40 years ago for $6,000. Cybil is either going to sell the car for
$8,000 or have it restored and sell it for $22,000. The restoration will cost $6,000. Cybil
would be better off by:
A) $2,000 to have the vehicle restored
B) $6,000 to have the vehicle restored
C) $8,000 to have the vehicle restored
D) $10,000 to have the vehicle restored
9) For Year 2, Etzkorn Corporation’s sales were $1,480,000, its gross margin was
$580,000, its net operating income was $63,714, its net income before taxes was
$42,714, and its net income was $29,900. The company’s total stockholders’ equity at
the end of Year 2 amounted to $829,000 and at the end of Year 1 to $800,000. The
company’s return on equity for Year 2 is closest to:
A.3.67%
B.60.16%
C.5.24%
D.7.82%
10) Oldham Corporation bases its predetermined overhead rate on variable
manufacturing overhead cost of $4.00 per machine-hour and fixed manufacturing
overhead cost of $87,822 per period. If the denominator level of activity is 4,100
machine-hours, the fixed component in the predetermined overhead rate would be:
A.$25.42
B.$4.00
C.$21.42
D.$400.00