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1) prater company has provided the following data:
the best estimate of the company's variable selling and administrative expense per unit
is:
a.$0.24 per unit
b.$4.17 per unit
c.$0.91 per unit
d.$0.96 per unit
2) a partial listing of costs incurred at peggs corporation during september appears
below:
the total of the manufacturing overhead costs listed above for september is:
a.$71,000
b.$351,000
c.$669,000
d.$40,000
3) the following standards for variable overhead have been established for a company
that makes only one product:
the following data pertain to operations for the last month:
required:
a. what is the variable overhead rate variance for the month?
b. what is the variable overhead efficiency variance for the month?
4) the return on total assets for year 2 is closest to:
a.4.27%
b.5.85%
c.5.83%
d.4.26%
5) firestack company's management believes that every 5% increase in the selling price
of one of the company's products results in a 13% decrease in the product's total unit
sales. the variable production cost of this product is $37.50 per unit and the variable
selling and administrative cost is $4.30 per unit.
the product's profit-maximizing price according to the formula in the text is closest to:
a.$46.98
b.$49.32
c.$64.34
d.$65.13
6) during its first year of operations, holt manufacturing company incurred the
following costs to produce 200,000 units of its only product:
holt also incurred the following costs in the sale of 180,000 units of product during its
first year:
assume that direct labor is a variable cost.
what would be the cost per unit of holt's finished goods inventory at the end of the first
year of operations under the variable costing method?
a.$2.34
b.$2.74
c.$4.50
d.$6.30
7) excerpts from stys corporation's most recent balance sheet and income statement
appear below:
dividends on common stock during year 2 totaled $50 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$8.20 per share.
the book value per share at the end of year 2 is closest to:
a.$8.70
b.$13.50
c.$1.00
d.$7.70
8) manikas corporation has provided the following data concerning its most important
raw material, compound v82t:
when recording the purchase of materials, raw materials would be:
a.debited for $148,920
b.credited for $149,650
c.debited for $149,650
d.credited for $148,920
9) the management of wymer corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. the company's controller
has provided an example to illustrate how this new system would work. in this example,
the allocation base is machine-hours and the estimated amount of the allocation base for
the upcoming year is 50,000 machine-hours. in addition, capacity is 59,000
machine-hours and the actual level of activity for the year is 53,300 machine-hours. all
of the manufacturing overhead is fixed and is $1,622,500 per year. for simplicity, it is
assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity. it is further assumed that this is also the actual
amount of manufacturing overhead for the year. a number of jobs were worked on
during the year, one of which was job j44v. this job required 230 machine-hours.
if the company bases its predetermined overhead rate on capacity, by how much was
manufacturing overhead underapplied or overapplied?
a.$107,085 overapplied
b.$156,750 overapplied
c.$156,750 underapplied
d.$107,085 underapplied
10) drabant kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during february, the kennel budgeted
for 2,000 tenant-days, but its actual level of activity was 2,040 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for february:
the activity variance for administrative expenses in february would be closest to:
a.$248 u
b.$248 f
c.$12 u
d.$12 f
11) genito corporation's static planning budget for october appears below. the company
bases its budgets on machine-hours.
in october, the actual number of machine-hours was 8,800, the actual supplies cost was
$69,450, the actual power cost was $34,190, the actual salaries cost was $86,490, and
the actual equipment depreciation was $37,600.
the spending variance for supplies cost in the flexible budget performance report for the
month should be:
a.$4,500 f
b.$7,110 f
c.$7,110 u
d.$4,500 u
12) megenity company's net income last year was $194,000. changes in the company's
balance sheet accounts for the year appear below:
the company declared and paid cash dividends of $132,000 last year. the following
questions pertain to the company's statement of cash flows.
no plant and equipment was disposed of during the year. the free cash flow for the year
was:
a.$248,000
b.$116,000
c.$161,000
d.$470,000
13) yoshihara corporation produces a single product and has the following cost
structure:
the absorption costing unit product cost is:
a.$140
b.$197
c.$133
d.$227
14) (ignore income taxes in this problem.) the management of gertz corporation is
investigating purchasing equipment that would cost $276,000 and have a 6 year life
with no salvage value. the equipment would allow an expansion of capacity that would
increase sales revenues by $107,000 per year and cash operating expenses by $40,000
per year.
required:
determine the simple rate of return on the investment to the nearest tenth of a percent.
show your work!
15) korando urban diner is a charity supported by donations that provides free meals to
the homeless. the diner's budget for june is to be based on 2,900 meals. the diner's
director has provided the following cost data to use in the budget: groceries, $2.60 per
meal; kitchen operations, $4,200 per month plus $1.15 per meal; administrative
expenses, $2,800 per month plus $0.65 per meal; and fundraising expenses, $1,000 per
month.
required:
prepare the diner's budget for the month of june. the budget will only contain the costs
listed above; no revenues will be on the budget.
16) kary clinic uses patient-visits as its measure of activity. during may, the clinic
budgeted for 3,800 patient-visits, but its actual level of activity was 4,100 patient-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for may:
required:
prepare a report showing the clinic's revenue and spending variances for may. label
each variance as favorable (f) or unfavorable (u).
17) manning co. manufactures and sells trophies for winners of athletic and other
events. its manufacturing plant has the capacity to produce 18,000 trophies each month;
current monthly production is 15,300 trophies. the company normally charges $141 per
trophy. cost data for the current level of production are shown below:
the company has just received a special one-time order for 900 trophies at $73 each. for
this particular order, no variable selling and administrative costs would be incurred. this
order would also have no effect on fixed costs.
required:
should the company accept this special order? why?
18) the following data for january have been provided by hillin corporation, a producer
of precision drills for oil exploration:
required:
compute the variable overhead rate variances for indirect labor and for power for
january. indicate whether each of the variances is favorable (f) or unfavorable (u). show
your work!
