The following partially completed T-accounts summarize transactions for Fabatz
Company during the year:
The manufacturing overhead was:
A. $2,200 underapplied
B. $2,200 overapplied
C. $400 overapplied
D. $400 underapplied
Answer:
Reference: 8-29
Hurren Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in June.
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 labor efficiency variance for June is:
A) $995 U
B) $950 U
C) $995 F
D) $950 F
Answer:
Reference: 8A-18
The following data for April has been provided by Mittler Corporation.
The volume variance for April is:
A) $10,150 U
B) $8,120 U
C) $8,120 F
D) $10,150 F
Answer:
Heller Corporation uses the weighted-average 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.
What are the equivalent units for materials for the month in the first processing
department?
A. 840
B. 9,140
C. 9,700
D. 8,300
Answer:
The following partially completed T-accounts summarize transactions for Fabatz
Company during the year:
The manufacturing overhead applied was:
A. $2,200
B. $3,000
C. $5,800
D. $13,900
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.
Which of the following is correct regarding the operating activities section of the
statement of cash flows?
A. The change in Accounts Receivable will be subtracted from net income; The change
in Inventory will be added to net income
B. The change in Accounts Receivable will be added to net income; The change in
Inventory will be subtracted from net income
C. The change in Accounts Receivable will be added to net income; The change in
Inventory will be added to net income
D. The change in Accounts Receivable will be subtracted from net income; The change
in Inventory will be subtracted from net income
Answer:
Dieringer Corporation’s most recent balance sheet and income statement appear below:
The accounts receivable turnover for Year 2 is closest to:
A. 1.14
B. 8.19
C. 0.88
D. 8.73
Answer:
The most recent balance sheet and income statement of Swanigan Corporation appear
below:
Cash dividends were $18. The company did not sell or retire any property, plant, and
equipment during the year. The net cash provided by (used in) operating activities for
the year was:
A. $127
B. $39
C. $49
D. $126
Answer:
Tronnes Corporation’s net income last year was $1,750,000. The dividend on common
stock was $2.60 per share and the dividend on preferred stock was $2.50 per share. The
market price of common stock at the end of the year was $57.70 per share. Throughout
the year, 300,000 shares of common stock and 100,000 shares of preferred stock were
outstanding. The price-earnings ratio is closest to:
A. 17.85
B. 11.54
C. 24.04
D. 9.89
Answer:
The Chase Company uses a standard cost system in which manufacturing overhead
costs are applied to products on the basis of standard machine-hours. For November, the
company’s flexible budget for manufacturing overhead showed the following total
budgeted costs at the denominator activity level of 40,000 machine-hours:
During November 42,000 machine-hours were used to complete 13,200 units of product
with the following actual overhead costs:
The standard time allowed to complete one unit of product is 3.6 machine-hours.
The variable overhead efficiency variance for utilities cost for November was:
A. $2,760 favorable
B. $3,760 unfavorable
C. $3,760 favorable
D. $1,000 favorable
Answer:
Mitchell Company had the following budgeted sales for the last half of last year:
The company is in the process of preparing a cash budget and must determine the
expected cash collections by month. To this end, the following information has been
assembled:
Collections on credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
Assume that the accounts receivable balance on July 1 was $75,000. Of this amount,
$60,000 represented uncollected June sales and $15,000 represented uncollected May
sales. Given these data, the total cash collected during July would be:
A. $150,000
B. $235,000
C. $215,000
D. $200,000
Answer:
A manufacturing company uses a standard costing system in which standard
machine-hours (MHs) is 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:
How much overhead was applied to products during the period to the nearest dollar?
A. $128,140
B. $130,601
C. $130,900
D. $127,160
Answer:
Roberts Company produces a single product. This year, the company’s net operating
income under absorption costing was $2,000 lower than under variable costing. The
company sold 8,000 units during the year, and its variable costs were $8 per unit, of
which $2 was variable selling and administrative expense. If production cost was $10
per unit under absorption costing, then how many units did the company produce
during the year? (The company produced the same number of units last year.)
A. 7,500 units
B. 7,000 units
C. 9,000 units
D. 8,500 units
Answer:
The Consumer Products Division of Weiter Corporation had average operating assets of
$570,000 and net operating income of $65,100 in March. The minimum required rate of
return for performance evaluation purposes is 12%.
What was the Consumer Products Division’s residual income in March?
A. -$3,300
B. $3,300
C. -$7,812
D. $7,812
Answer:
Manufacturing overhead consists of:
A. all manufacturing costs.
B. indirect materials but not indirect labor.
C. all manufacturing costs, except direct materials and direct labor.
D. indirect labor but not indirect materials.
Answer:
Management of Mcentire Corporation has asked your help as an intern in preparing
some key reports for April. Direct materials cost was $64,000, direct labor cost was
$47,000, and manufacturing overhead was $75,000. Selling expense was $15,000 and
administrative expense was $44,000.
The prime cost for April was:
A. $59,000
B. $122,000
C. $100,000
D. $111,000
Answer:
Last year Cumber Company reported a cost of goods sold of $70,000. Inventories
decreased by $12,000 during the year, and accounts payable increased by $8,000. The
company uses the direct method to determine the net cash provided by operating
activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis
would be:
A. $90,000
B. $62,000
C. $58,000
D. $50,000
Answer:
Delhoyo Corporation, a manufacturing company, has provided data concerning its
operations for September. The beginning balance in the raw materials account was
$37,000 and the ending balance was $29,000. Raw materials purchases during the
month totaled $57,000. Manufacturing overhead cost incurred during the month was
$102,000, of which $2,000 consisted of raw materials classified as indirect materials.
The direct materials cost for September was:
A. $63,000
B. $57,000
C. $65,000
D. $49,000
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 cost to manufacture 6,300 units is closest to:
A. $1,425,690
B. $1,355,760
C. $1,495,620
D. $1,449,000
Answer:
(Ignore income taxes in this problem.) Tweedie Corporation has entered into a 7 year
lease for a building it will use as a warehouse. The annual payment under the lease will
be $1,662. The first payment will be at the end of the current year and all subsequent
payments will be made at year-ends. What is the present value of the lease payments if
the discount rate is 13%?
A. $10,296
B. $11,634
C. $7,351
D. $4,945
Answer:
Deboer Company, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the total period cost for the month under the variable costing approach?
A. $8,400
B. $17,600
C. $26,000
D. $22,000
Answer:
The changes in Tener Company’s balance sheet account balances for last year appear
below:
The company’s income statement for the year appears below:
The company declared and paid $67,000 in cash dividends during the year. It did not
dispose of any property, plant, and equipment during the year. The company uses the
direct method to determine the net cash provided by operating activities.
On the statement of cash flows, the cost of goods sold adjusted to a cash basis would
be:
A. $518,000
B. $520,000
C. $522,000
D. $516,000
Answer:
Which of the following costs is often important in decision making, but is omitted from
conventional accounting records?
A. Fixed cost.
B. Sunk cost.
C. Opportunity cost.
D. Indirect cost.
Answer:
A furniture manufacturer 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 was the fixed manufacturing overhead budget variance for the period to the
nearest dollar?
A. $4,286 F
B. $1,800 U
C. $2,775 F
D. $1,575 F
Answer:
Hagerman Corporation’s most recent income statement appears below:
The beginning balance of total assets was $140,000 and the ending balance was
$90,000. The return on total assets is closest to:
A. 18.3%
B. 24.3%
C. 34.8%
D. 26.1%
Answer:
Marrin Corporation makes three products that use the current constraint-a particular
type of machine. Data concerning those products appear below:
Rank the products in order of their current profitability from most profitable to least
profitable. In other words, rank the products in the order in which they should be
emphasized.
A. KZ,XB,ZP
B. ZP,KZ,XB
C. XB,ZP,KZ
D. KZ,ZP,XB
Answer:
Reference: 8-30
Snuggs Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in October.
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 quantity variance for October is:
A) $1,798 U
B) $1,798 F
C) $1,740 F
D) $1,740 U
Answer:
Salge Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The
variable overhead rate is $8.10 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $74,730 per month, which includes depreciation of $20,670.
All other fixed manufacturing overhead costs represent current cash flows. The direct
labor budget indicates that 5,300 direct labor-hours will be required in September.
The September cash disbursements for manufacturing overhead on the manufacturing
overhead budget should be:
A. $42,930
B. $54,060
C. $96,990
D. $117,660
Answer:
Which of the following statements provide(s) an argument in favor of including only a
plant’s net book value rather than gross book value as part of operating assets in the
ROI computation?
I. Net book value is consistent with how plant and equipment items are reported on a
balance sheet.
II. Net book value is consistent with the computation of net operating income, which
includes depreciation as an operating expense.
III. Net book value allows ROI to decrease over time as assets get older.
A. Only I.
B. Only III.
C. Only I and II.
D. Only I and III.
Answer:
Scherer Corporation is preparing a bid for a special order that would require 720 liters
of material U48N. The company already has 560 liters of this raw material in stock that
originally cost $6.30 per liter. Material U48N is used in the company’s main product
and is replenished on a periodic basis. The resale value of the existing stock of the
material is $5.80 per liter. New stocks of the material can be readily purchased for
$6.65 per liter. What is the relevant cost of the 720 liters of the raw material when
deciding how much to bid on the special order?
A. $4,592
B. $4,788
C. $4,456
D. $4,176
Answer:
The following production and average cost data for two levels of monthly production
volume have been supplied by a company that produces a single product:
The best estimate of the total monthly fixed manufacturing cost is:
A. $25,600
B. $114,400
C. $47,700
D. $69,800
Answer:
Vanwagenen Inc. has provided the following data for the month of April:
The adjusted cost of goods sold that appears on the income statement for April is:
A. $197,000
B. $195,000
C. $200,000
D. $199,000
Answer: