Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Ahsan Company makes 60,000 units per year of a part it uses in the products it
manufactures. The unit product cost of this part is computed as follows:
An outside supplier has offered to sell the company all of these parts it needs for $45.70
a unit. If the company accepts this offer, the facilities now being used to make the part
could be used to make more units of a product that is in high demand. The additional
contribution margin on this other product would be $318,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the
part would be avoided. However, $3.50 of the fixed manufacturing overhead cost being
applied to the part would continue even if the part were purchased from the outside
supplier. This fixed manufacturing overhead cost would be applied to the company's
remaining products.
What is the net total dollar advantage (disadvantage) of purchasing the part rather than
making it?
A. $318,000
B. $(522,000)
C. $(312,000)
D. $(204,000)
Answer:
Madengrad Company manufactures a single product called a densimeter. This product
is a density monitoring device attached to large industrial mixing machines used in
flour, rubber, petroleum, and chemical manufacturing. A densimeter sells for $900 per
unit. The following variable expenses are incurred to produce and sell each densimeter:
Madengrad's annual fixed expenses are $6,600,000.
The annual sales volume required for Madengrad Company to break-even is:
A. 22,000 units
B. 11,000 units
C. 8,400 units
D. 14,000 units
Answer:
Self-imposed budgets typically are:
A. not subject to review by higher levels of management since to do so would
contradict the participative aspect of the budgeting processing.
B. not subject to review by higher levels of management except in specific cases where
the input of higher management is required.
C. subject to review by higher levels of management in order to prevent the budgets
from becoming too loose.
D. not critical to the success of a budgeting program.
Answer:
Excerpts from Raimo Corporation's comparative balance sheet appear below:
Which of the following is the correct treatment within the operating activities section of
the statement of cash flows using the indirect method?
A. The change in Inventory is added to net income; The change in Accounts Payable is
added to net income
B. The change in Inventory is added to net income; The change in Accounts Payable is
subtracted from net income
C. The change in Inventory is subtracted from net income; The change in Accounts
Payable is added to net income
D. The change in Inventory is subtracted from net income; The change in Accounts
Payable is subtracted from net income
Answer:
Babuca Corporation has provided the following production and total cost data for two
levels of monthly production volume. The company produces a single product.
The best estimate of the total variable manufacturing cost per unit is:
A. $82.00
B. $70.20
C. $56.70
D. $11.80
Answer:
Franklin Glass Works uses a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours. Each unit requires two standard
hours of direct labor for completion. The denominator activity for the year was based
on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for
the year, and the fixed manufacturing overhead rate was $1.50 per direct labor-hour.
The actual data pertaining to the manufacturing overhead for the year are presented
below:
The fixed manufacturing overhead applied to Franklin's production for the year is:
A. $484,200
B. $575,000
C. $594,000
D. $600,000
Answer:
The Chase Company has a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours (DLHs). The company recorded the
following activity and cost data relating to manufacturing overhead for October:
The amount of fixed manufacturing overhead cost that was estimated for September
was:
A. $45,900
B. $54,768
C. $49,920
D. $47,703
Answer:
Hartzog 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 $5 thousand. The market price of common stock at the end of
Year 2 was $7.04 per share.
The dividend yield ratio for Year 2 is closest to:
A. 0.36%
B. 92.31%
C. 4.26%
D. 4.62%
Answer:
Olds Inc., which produces a single product, has provided the following data for its most
recent month of operations:
There were no beginning or ending inventories. The absorption costing unit product
cost was:
A. $97
B. $130
C. $99
D. $207
Answer:
The Baily Division recorded operating data as follows for the past two years:
Baily Division's turnover was exactly the same in both Year 1 and Year 2.
The average operating assets in Year 2 were:
A. $720,000
B. $750,000
C. $800,000
D. $900,000
Answer:
The activity in Nolan Company's Blending Department for the month of April is given
below:
All materials are added at the beginning of processing in the Blending Department.
The equivalent units for labor and overhead for the month, using the FIFO method, are:
A. 47,000 units
B. 51,000 units
C. 5,000 units
D. 54,000 units
Answer:
Jumper Company uses the weighted-average method in its process costing system. The
following data pertain to operations in the first processing department for a recent
month:
What was the cost per equivalent unit for conversion cost?
A. $5.00
B. $12.30
C. $8.50
D. $14.75
Answer:
Abe Company, which has only one product, has provided the following data concerning
its most recent month of operations:
What is the unit product cost for the month under absorption costing?
A. $88
B. $99
C. $81
D. $106
Answer:
The following costs were incurred in September:
Conversion costs during the month totaled:
A. $50,000
B. $59,000
C. $137,000
D. $67,000
Answer:
A manufacturer of industrial equipment 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 is the predetermined overhead rate to the nearest cent?
A. $16.97
B. $17.25
C. $16.59
D. $17.65
Answer:
A manufacturing company that produces a single product has provided the following
data concerning its most recent month of operations:
The total contribution margin for the month under variable costing is:
A. $183,600
B. $90,000
C. $70,400
D. $169,200
Answer:
The standards for product A22G specify 8.2 direct labor-hours per unit at $11.90 per
direct labor-hour. Last month 200 units of product A22G were produced using 1,700
direct labor-hours at a total direct labor wage cost of $20,060.
Required:
a. What was the labor rate variance for the month?
b. What was the labor efficiency variance for the month?
c. Prepare a journal entry to record direct labor costs during the month, including the
direct labor variances.
Answer:
The following account balances have been provided for the end of the most recent year:
The book value per share of common stock is:
A. $22
B. $25
C. $20
D. $28
Answer:
Bennett Company uses the FIFO method in its process costing system. During April the
equivalent units of production with respect to conversion costs totaled 24,600 units.
Work in process inventory on April 1 consisted of 8,000 units, 40% complete with
respect to conversion costs. A total of 25,000 units were started into production during
the month and 20,000 units were transferred to finished goods. Based on this
information, Bennett Company's work in process inventory on April 30 consisted of:
A. 13,000 units, 40% complete with respect to conversion costs
B. 5,000 units, 40% complete with respect to conversion costs
C. 13,000 units, 60% complete with respect to conversion costs
D. 4,600 units, 40% complete with respect to conversion costs
Answer:
Meister Electronics Corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours (MHs). The
company had budgeted its fixed manufacturing overhead cost at $68,800 for the month
and its level of activity at 2,000 MHs. The actual total fixed manufacturing overhead
was $73,300 for the month and the actual level of activity was 1,800 MHs. What was
the fixed manufacturing overhead budget variance for the month to the nearest dollar?
A) $11,380 unfavorable
B) $4,500 unfavorable
C) $11,380 favorable
D) $4,500 favorable
Answer:
LHU Corporation makes and sells a product called Product WZ. Each unit of Product
WZ requires 2.5 hours of direct labor at the rate of $15.00 per direct labor-hour.
Management would like you to prepare a Direct Labor Budget for June.
The budgeted direct labor cost per unit of Product WZ would be:
A. $37.50
B. $6.00
C. $15.00
D. $17.50
Answer:
Morisey Corporation bases its predetermined overhead rate on variable manufacturing
overhead cost of $8.60 per machine-hour and fixed manufacturing overhead cost of
$457,002 per period. If the denominator level of activity is 6,300 machine-hours, the
predetermined overhead rate would be:
A. $81.14
B. $860.00
C. $72.54
D. $8.60
Answer:
Data concerning Delmore Corporation's single product appear below:
The break-even in monthly unit sales is closest to:
A. 7,804 units
B. 4,390 units
C. 2,810 units
D. 5,001 units
Answer:
Nyman Company successfully switched to a lean production system at the beginning of
March. Therefore, as shown by the summary below, there were no work in process
inventories on hand at the end of the month.
If Nyman Company uses the FIFO cost method, the March equivalent units for
conversion would be:
A. 150,000 units
B. 190,000 units
C. 172,000 units
D. 168,000 units
Answer:
Getchman Marketing, Inc., a merchandising company, reported sales of $592,500 and
cost of goods sold of $305,000 for April. The company's total variable selling expense
was $37,500; its total fixed selling expense was $16,000; its total variable
administrative expense was $35,000; and its total fixed administrative expense was
$38,900. The cost of goods sold in this company is a variable cost.
The gross margin for April is:
A. $287,500
B. $215,000
C. $537,600
D. $160,100
Answer:
Reference: 8-58
Schuetz Corporation makes a product whose variable overhead standards are based on
direct labor-hours. The quantity standard is 0.4 hours per unit. The variable overhead
rate standard is $5.00 per hour. In July the company produced 7,500 units using 2,740
direct labor-hours. The actual variable overhead rate was $5.20 per hour.
The variable overhead efficiency variance for July is:
A) $1,352 U
B) $1,352 F
C) $1,300 U
D) $1,300 F
Answer:
The formula for the gross margin percentage is:
A. (Sales - Cost of goods sold)/Cost of goods sold
B. (Sales - Cost of goods sold)/Sales
C. Net income/Sales
D. Net income/Cost of goods sold
Answer:
Reference: 8-48
Davidson Corporation makes a product that has the following direct labor standards:
In September the company produced 4,900 units using 2,210 direct labor-hours. The
actual direct labor rate was $22.40 per hour.
The labor efficiency variance for September is:
A) $5,520 F
B) $5,376 F
C) $5,520 U
D) $5,376 U
Answer:
Ring, Incorporated's income statement for the most recent month is given below.
Refer to the original data.
A proposal has been made that will lower variable costs in Store P to 65% of sales.
However, this reduction can only be accomplished by a $16,000 increase in Store P's
traceable fixed costs. If this proposal is implemented and sales remain constant, overall
company net operating income should:
A. remain the same
B. decrease by $2,000
C. increase by $2,000
D. increase by $14,000
Answer:
Excerpts from Tigner Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,230 and the cost of goods sold was $820.
The working capital at the end of Year 2 is:
A. $740
B. $790
C. $430
D. $150
Answer:
Carr Company produces a single product. During the past year, Carr manufactured
25,000 units and sold 20,000 units. Production costs for the year were as follows:
Sales totaled $850,000, variable selling expenses totaled $110,000, and fixed selling
and administrative expenses totaled $170,000. There were no units in beginning
inventory. Assume that direct labor is a variable cost.
The net operating income for the year under variable costing would be:
A. $28,000 lower than under absorption costing
B. $28,000 higher than under absorption costing
C. $50,000 lower than under absorption costing
D. $50,000 higher than under absorption costing
Answer:
Reference: 8A-13
A manufacturer of industrial equipment has a standard costing system based on
standard direct labor-hours (DLHs) as the measure of activity. Data from the companys
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
How much overhead was applied to products during the period to the nearest dollar?
A) $44,712
B) $44,125
C) $43,125
D) $44,850
Answer:
Evergreen Corp. has provided the following data:
The number of units needed to achieve a target net operating income of $49,500 would
be:
A. 1,238 units
B. 2,750 units
C. 3,200 units
D. 2,057 units
Answer:
