1) franca corporation has two service departments, administrative and facilities, and two
operating departments, assembly and customer feedbacks.
the company uses the direct method to allocate service department costs to operating
departments. administrative costs are allocated on the basis of employee hours and
facilities costs are allocated on the basis of space occupied.
the total customer solutions department cost after the allocations of service department
costs is closest to:
a.$696,940
b.$682,990
c.$694,753
d.$697,172
2) harville midwifery’s cost formula for its wages and salaries is $1,610 per month plus
$199 per birth. for the month of march, the company planned for activity of 118 births,
but the actual level of activity was 122 births. the actual wages and salaries for the
month was $25,430. the spending variance for wages and salaries in march would be
closest to:
a.$458 f
b.$338 u
c.$458 u
d.$338 f
3) isaac corporation processes sugar beets in batches that it purchases from farmers for
$47 a batch. a batch of sugar beets costs $14 to crush in the company’s plant. two
intermediate products, beet fiber and beet juice, emerge from the crushing process. the
beet fiber can be sold as is for $22 or processed further for $13 to make the end product
industrial fiber that is sold for $42. the beet juice can be sold as is for $45 or processed
further for $27 to make the end product refined sugar that is sold for $67. which of the
intermediate products should be processed further?
a.beet fiber should not be processed into industrial fiber; beet juice should not be
processed into refined sugar
b.beet fiber should not be processed into industrial fiber; beet juice should be processed
into refined sugar
c.beet fiber should be processed into industrial fiber; beet juice should not be processed
into refined sugar
d.beet fiber should be processed into industrial fiber; beet juice should be processed
into refined sugar
4) a company anticipates a taxable cash receipt of $20,000 in year 4 of a project. the
company’s tax rate is 30% and its discount rate is 14%. the present value of this future
cash flow is closest to:
a.$14,000
b.$6,000
c.$3,552
d.$8,289
5) johnson company operates two plants, plant a and plant b. johnson company reported
for the year just ended a contribution margin of $50,000 for plant a. plant b had sales of
$200,000 and a contribution margin ratio of 30%. net operating income for the
company was $20,000 and traceable fixed costs for the two plants totaled $50,000.
johnson company’s common fixed costs for last year were:
a.$50,000
b.$70,000
c.$40,000
d.$90,000
6) veale corporation’s most recent balance sheet appears below:
net income for the year was $107. cash dividends were $29.
the net cash provided by (used by) financing activities for the year was:
a.($51)
b.$5
c.($29)
d.($27)
7) qiu company, which has only one product, has provided the following data
concerning its most recent month of operations:
required:
a. what is the unit product cost for the month under variable costing?
b. prepare a contribution format income statement for the month using variable costing.
c. without preparing an income statement, determine the absorption costing net
operating income for the month. (hint: use the reconciliation method.)
8) toma nuptial bakery makes very elaborate wedding cakes to order. the company has
an activity-based costing system with three activity cost pools. the activity rate for the
size-related activity cost pool is $1.14 per guest. (the greater the number of guests, the
larger the cake.) the activity rate for the complexity-related cost pool is $31.86 per tier.
(cakes with more tiers are more complex.) finally, the activity rate for the order-related
activity cost pool is $59.66 per order. (each wedding involves one order for a cake.) the
activity rates include the costs of raw ingredients such as flour, sugar, eggs, and
shortening. the activity rates do not include the costs of purchased decorations such as
miniature statues and wedding bells, which are accounted for separately.
data concerning two recent orders appear below:
assuming that the company charges $458.08 for the towry wedding cake, what would
be the overall margin on the order?
a.$106.76
b.$79.50
c.$139.16
d.$378.58
9) (ignore income taxes in this problem.) sloman company is considering purchasing a
machine that would cost $436,800 and have a useful life of 5 years. the machine would
reduce cash operating costs by $132,364 per year. the machine would have no salvage
value.
required:
a. compute the payback period for the machine.
b. compute the simple rate of return for the machine.
10) cole laboratories makes and sells a lawn fertilizer called fastgro. the company has
developed standard costs for one bag of fastgro as follows:
the company had no beginning inventories of any kind on jan. 1. variable overhead is
applied to production on the basis of standard direct labor-hours. during january, the
following activity was recorded by the company:
production of fastgro: 4,000 bags
direct materials purchased: 85,000 pounds at a cost of $32,300
direct labor worked: 390 hours at a cost of $4,875
variable overhead incurred: $1,475
inventory of direct materials on jan. 31: 3,000 pounds
the materials price variance for january is:
a.$1,640 f
b.$1,640 u
c.$1,700 f
d.$1,300 u
11) when the actual amount of a raw material used in production is less than the
standard amount allowed for the actual output, the journal entry would include:
a.debit to raw materials; credit to materials quantity variance
b.debit to work-in-process; credit to materials quantity variance
c.debit to raw materials; debit to materials quantity variance
d.debit to work-in-process; debit to materials quantity variance
12) verne manufacturing corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on
direct labor-hours (dlhs). the company has two products, f22s and c45u, about which it
has provided the following data:
the company’s estimated total manufacturing overhead for the year is $1,697,280 and
the company’s estimated total direct labor-hours for the year is 48,000.
the company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. data for this proposed activity-based costing
system appear below:
required:
a. determine the unit product cost of each of the company’s two products under the
traditional costing system.
b. determine the unit product cost of each of the company’s two products under
activity-based costing system.
13) moulgadi corporation uses the fifo 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 cost per equivalent unit for materials for the month in the first processing
department is closest to:
a.$23.28
b.$21.83
c.$23.96
d.$19.70
14) data concerning the direct labor costs for december of dimpfl corporation appear
below:
the journal entry to record the incurrence of direct labor costs in december would
include the following for work in process:
a.credit of $296,424
b.debit of $296,424
c.credit of $388,962
d.debit of $388,962
15) bello corporation produces and sells two products. in the most recent month,
product d99p had sales of $33,000 and variable expenses of $15,840. product g71p had
sales of $42,000 and variable expenses of $4,410. the fixed expenses of the entire
company were $49,790.
the break-even point for the entire company is closest to:
a.$25,210
b.$49,790
c.$68,205
d.$70,040
16) osier corporation, which produces cellular transmission towers, has provided the
following data:
the variable overhead efficiency variance for power is:
a.$2,205 f
b.$238 u
c.$2,443 f
d.$2,205 u
17) madtack company’s beginning and ending inventories for the month of november
were as follows:
madtack applies manufacturing overhead cost to jobs at the rate of 70% of direct labor
cost incurred. the company does not close underapplied or overapplied manufacturing
overhead to cost of goods sold until the end of the year.
madtack company’s manufacturing overhead for november was:
a.overapplied by $8,000
b.underapplied by $8,000
c.overapplied by $132,000
d.underapplied by $132,000