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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 inventory turnover for Year 2 is closest to:
A. 0.93
B. 1.08
C. 5.85
D. 6.08
Answer:
Reference: 8-59
Mazzo Corporation makes a product with the following standards for direct labor and
variable overhead:
In February the companys budgeted production was 5,000 units, but the actual
production was 5,100 units. The company used 2,090 direct labor-hours to produce this
output. The actual variable overhead cost was $6,688. The company applies variable
overhead on the basis of direct labor-hours.
The variable overhead efficiency variance for February is:
A) $150 F
B) $160 F
C) $160 U
D) $150 U
Answer:
Dodrill Company makes two products from a common input. Joint processing costs up
to the split-off point total $43,200 a year. The company allocates these costs to the joint
products on the basis of their total sales values at the split-off point. Each product may
be sold at the split-off point or processed further. Data concerning these products appear
below:
What is the minimum amount the company should accept for Product X if it is to be
sold at the split-off point?
A. $26,800
B. $19,800
C. $52,200
D. $45,200
Answer:
Branden Company uses the FIFO method in its process costing system. All materials
are introduced at the beginning of the process in Department One. The following data
relate to the month of May for Department One:
What are the equivalent units for the month of May?
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
Estes Company has assembled the following data for its divisions for the past year:
Division A's residual income is:
A. $20,000
B. $30,000
C. $35,000
D. $45,000
Answer:
Abe Company, which has only one product, has provided the following data concerning
its most recent month of operations:
What is the net operating income for the month under absorption costing?
A. $11,400
B. $(12,900)
C. $16,800
D. $5,400
Answer:
The Dodge Company makes and sells a single product and uses a standard cost system
in which manufacturing overhead costs are applied to units of product on the basis of
standard direct labor-hours. The standard cost card shows that 5 direct labor-hours are
required per unit of product. The Dodge Company had the following budgeted and
actual data for the year:
The budgeted direct labor-hours is used as the denominator activity for the month.
The variable overhead rate variance was:
A. $4,500 U
B. $10,500 U
C. $13,500 U
D. $16,500 U
Answer:
Franklins variable overhead rate variance for the year is:
A) $20,000 unfavorable
B) $22,000 favorable
C) $22,000 unfavorable
D) $20,000 favorable
Answer:
Which of the following three statements are correct?
I. A profit center has control over both cost and revenue.
II. An investment center has control over invested funds, but not over costs and
revenue.
III. A cost center has no control over sales
A. Only I
B. Only II
C. Only I and III
D. Only I and II
Answer:
Rave Corporation produces and sells a single product. Data concerning that product
appear below:
The break-even in monthly unit sales is closest to:
A. 2,844 units
B. 3,620 units
C. 3,210 units
D. 1,701 units
Answer:
A labor efficiency variance resulting from the use of poor quality materials should be
charged to:
A) the production manager.
B) the purchasing agent.
C) manufacturing overhead.
D) the industrial engineering department.
Answer:
The information below was obtained from the records of the first processing department
of Moore Company for the month of May. The company uses the weighted-average
method in its process costing system.
All materials are added at the beginning of the process.
The equivalent units for materials for the month of May were:
A. 60,000 units
B. 74,000 units
C. 64,000 units
D. 69,800 units
Answer:
East Company has the following budgeted cost and revenue data:
A 10% increase in fixed expense would result in:
A. a 10% decrease in net operating income.
B. a $14,000 increase in total contribution margin.
C. an increase in the margin of safety.
D. an increase in the break-even point.
Answer:
Reference: 8-35
Sande Corporation makes a product with the following standard costs:
In November the companys budgeted production was 2,900 units but the actual
production was 3,000 units. The company used 27,670 grams of the direct material and
1,390 direct labor-hours to produce this output. During the month, the company
purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct
labor cost was $29,607 and the actual variable overhead cost was $2,502.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The materials price variance for November is:
A) $5,520 F
B) $6,340 F
C) $5,520 U
D) $6,340 U
Answer:
The following data were supplied by Reader Corporation:
The contribution margin is:
A. $420,000
B. $54,000
C. $474,000
D. $180,000
Answer:
In a process costing system, manufacturing overhead applied is usually recorded as a
debit to:
A. Finished goods.
B. Work in process.
C. Manufacturing overhead.
D. Cost of goods sold.
Answer:
A company that makes organic fertilizer has supplied the following data:
The company's degree of operating leverage is closest to:
A. 3.50
B. 1.49
C. 9.54
D. 2.41
Answer:
Diston Company uses the weighted-average method in its process costing system. The
first processing department, the Welding Department, started the month with 18,000
units in its beginning work in process inventory that were 30% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$44,820. An additional 90,000 units were started into production during the month.
There were 21,000 units in the ending work in process inventory of the Welding
Department that were 10% complete with respect to conversion costs. A total of
$677,970 in conversion costs were incurred in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month? (Round
off to three decimal places.)
A. $8.112
B. $8.300
C. $7.533
D. $6.108
Answer:
Mounts Corporation produces and sells two products. In the most recent month, Product
I05L had sales of $32,000 and variable expenses of $10,880. Product P42T had sales of
$45,000 and variable expenses of $18,380. And the fixed expenses of the entire
company were $46,070. The break-even point for the entire company is closest to:
A. $30,930
B. $75,330
C. $74,306
D. $46,070
Answer:
Reference: 8-41
Johnny Corporation makes a product that uses a material with the following standards:
The company budgeted for production of 9,500 units in April, but actual production was
9,600 units. The company used 85,400 kilos of direct material to produce this output.
The company purchased 91,900 kilos of the direct material at $1.10 per kilo.
The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for April is:
A) $7,348 U
B) $6,680 U
C) $6,680 F
D) $7,348 F
Answer:
Njombe Corporation manufactures a variety of products. In the past, Njombe has been
using a traditional costing system in which the predetermined overhead rate was 150%
of direct labor cost. Selling prices had been set by multiplying total product cost by
200%. Sensing that this system was distorting costs and selling prices, Njombe has
decided to switch to an activity-based costing system for manufacturing overhead costs
using three activity cost pools. Selling prices are still to be set at 200% of unit product
cost under the new system. Information on these cost pools for next year are as follows:
Information (on a per unit basis) related to three popular products at Njombe are as
follows:
In comparing the traditional system with the activity-based costing system, which of
Njombe's Models had higher unit product costs under the traditional system?
A. #19
B. #58
C. #19 and #58
D. #36 and #58
E. #19, #36, and #58
Answer:
The following data have been provided by a retailer that sells a single product.
What is the best estimate of the company's total fixed selling and administrative
expense per year?
A. $0
B. $80,000
C. $44,000
D. 174,000
Answer:
The Rial Company's income statement for June is given below:
During June, the sales clerks in Division F received salaries totaling $35,000. Assume
that during July the salaries of these sales clerks are discontinued and instead they are
paid a commission of 18% of sales. If sales in Division F increase by $65,000 as a
result of this change, the July segment margin for Division F should be:
A. $42,700
B. $19,400
C. $54,400
D. $94,000
Answer:
Hocking Corporation's comparative balance sheet appears below:
The company's net income (loss) for the year was $10,000 and its cash dividends were
$1,000. It did not sell or retire any property, plant, and equipment during the year. The
company uses the indirect method to determine the net cash provided by operating
activities.
The company's net cash used in investing activities is:
A. $5,000
B. $18,000
C. $27,000
D. $41,000
Answer:
Compound Q11H is a raw material used to make Grater Corporation's major product.
The standard cost of compound Q11H is $23.00 per ounce and the standard quantity is
3.8 ounces per unit of output. Data concerning the compound for October appear below:
The raw material was purchased on account.
The Materials Price Variance for October would be recorded as a:
A. Debit of $230
B. Credit of $212
C. Debit of $212
D. Credit of $230
Answer:
The Immanuel Company has just obtained a request for a special order of 6,000 jigs to
be shipped at the end of the month at a selling price of $7 each. The company has a
production capacity of 90,000 jigs per month with total fixed production costs of
$144,000. At present, the company is selling 80,000 jigs per month through regular
channels at a selling price of $11 each. For these regular sales, the cost for one jig is:
If the special order is accepted, Immanuel will not incur any selling expense; however,
it will incur shipping costs of $0.30 per unit. Total fixed production cost would not be
affected by this order.
If Immanuel accepts this special order, the change in monthly net operating income will
be a:
A. $12,600 increase
B. $14,400 increase
C. $3,600 increase
D. $1,800 increase
Answer:
The information below was obtained from the records of the first processing department
of Moore Company for the month of May. The company uses the weighted-average
method in its process costing system.
All materials are added at the beginning of the process.
The equivalent units for labor and overhead for the month of May were:
A. 60,000 units
B. 69,800 units
C. 65,800 units
D. 73,800 units
Answer:
Chace Products is a division of a major corporation. Last year the division had total
sales of $21,300,000, net operating income of $575,100, and average operating assets of
$5,000,000. The company's minimum required rate of return is 12%.
The division's residual income is closest to:
A. $575,100
B. $1,175,100
C. $(1,980,900)
D. $(24,900)
Answer:
The balance in the Work in Process account equals:
A. the balance in the Finished Goods inventory account.
B. the balance in the Cost of Goods Sold account.
C. the balances on the job cost sheets of uncompleted jobs.
D. the balance in the Manufacturing Overhead account.
Answer:
Leija Manufacturing Company uses a job-order costing system and started the month of
March with one job in process (Job #359). This job had $500 of cost assigned to it at
this time. During March, Leija assigned production costs as follows to the jobs worked
on during the month:
During March, Leija completed and sold Job #359. Job #360 was also completed but
was not sold by month end. Job #361 was not completed by the end of March.
What is Leija's cost of goods manufactured for March?
A. $6,500
B. $14,100
C. $14,600
D. $16,500
Answer:
