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1) Last year a company had sales of $400,000, a turnover of 2.4, and a return on
investment of 36%. The company's net operating income for the year was:
A.$144,000
B.$120,000
C.$80,000
D.$60,000
2) The company's average collection period (age of receivables) for Year 2 is closest to:
A.70.1 days
B.1.1 days
C.72.1 days
D.1.0 days
3) Swinger Corporation's comparative balance sheet appears below:
The company did not dispose of any property, plant, and equipment during the year. Its
net income for the year was $10,000. The net cash provided by operating activities is:
A.$32,000
B.$36,000
C.$34,000
D.$28,000
4) Wales 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 2,700 tenant-days, but its actual level of activity was 2,730 tenant-days. The kennel
has provided the following data concerning the formulas to be used in its budgeting:
The food and supplies in the flexible budget for February would be closest to:
A.$31,017
B.$30,339
C.$31,476
D.$31,140
5) The best estimate of the total monthly fixed manufacturing cost is:
A) $65,400
B) $88,200
C) $93,100
D) $54,000
6) Minaya Corporation has two products, M20 and Y53, that use the same constrained
resource--a critical raw material. Data concerning those products follow:
The total amount of the constrained resource available is 9,900 grams.
Required:
a. Which product is most profitable, given the company's constraint?
b. How much of each product should be produced?
c. What is the total contribution margin if your plan in part (b) above is followed?
7) Assume that sufficient constraint time is available to satisfy demand for all but the
least profitable product. Up to how much should the company be willing to pay to
acquire more of the constrained resource?
A) $10.80 per minute
B) $69.44 per unit
C) $16.40 per minute
D) $14.04 per unit
8) A manufacturing company that produces a single product has provided the following
data concerning its most recent month of operations:
The total gross margin for the month under absorption costing is:
A.$6,800
B.$197,200
C.$149,600
D.$179,000
9) The net present value of the entire project is closest to:
A.$208,187
B.$315,800
C.$488,187
D.$294,000
10) Liest Corporation produces and sells a single product whose selling price is $100.00
per unit and whose variable expense is $48.00 per unit. The company's monthly fixed
expense is $244,400.
Required:
a. Assume the company's monthly target profit is $5,200. Determine the unit sales to
attain that target profit. Show your work!
b. Assume the company's monthly target profit is $26,000. Determine the dollar sales to
attain that target profit. Show your work!
11) Jurczyk Corporation makes a product that has the following direct labor standards:
In December the company's budgeted production was 4,600 units, but the actual
production was 4,400 units. The company used 1,330 direct labor-hours to produce this
output. The actual direct labor cost was $14,364.
The labor efficiency variance for December is:
A.$110 U
B.$108 F
C.$110 F
D.$108 U
12) Harris, Inc., has budgeted sales in units for the next five months as follows:
Past experience has shown that the ending inventory for each month should be equal to
20% of the next month's sales in units. The inventory on May 31 contained 1,880 units.
The company needs to prepare a production budget for the next five months.
The total number of units produced in July should be:
A.9,260 units
B.7,700 units
C.7,800 units
D.7,900 units
13) Which of the following is an example of a cost that is variable with respect to the
number of units produced?
A) Rent on the administrative office building.
B) Rent on the factory building.
C) Direct labor cost, where the direct labor workforce is adjusted to the actual
production of the period.
D) Salaries of top marketing executives.
14) The manufacturing overhead budget at Cardera Corporation is based on budgeted
direct labor-hours. The direct labor budget indicates that 2,300 direct labor-hours will
be required in January. The variable overhead rate is $1.00 per direct labor-hour. The
company's budgeted fixed manufacturing overhead is $28,060 per month, which
includes depreciation of $4,600. All other fixed manufacturing overhead costs represent
current cash flows.
The company recomputes its predetermined overhead rate every month. The
predetermined overhead rate for January should be:
A.$1.00 per direct labor-hour
B.$12.20 per direct labor-hour
C.$11.20 per direct labor-hour
D.$13.20 per direct labor-hour
15) Blane Corporation produces and sells a single product. Data concerning that
product appear below:
The break-even in monthly unit sales is closest to:
A.4,401
B.2,360
C.3,470
D.7,374
16) Ortman Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in May.
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 May is:
A.$483 U
B.$510 U
C.$483 F
D.$510 F
17) Maraby Corporation's inventory turnover for Year 2 was closest to:
A.11.2
B.7.8
C.9.4
D.13.5
18) If management decides to buy part J56 from the outside supplier rather than to
continue making the part, what would be the annual impact on the company's overall
net operating income?
A) Net operating income would increase by $44,000 per year.
B) Net operating income would increase by $10,000 per year.
C) Net operating income would decline by $10,000 per year.
D) Net operating income would decline by $44,000 per year.
19) Derf Corporation uses a standard cost system in which it applies manufacturing
overhead on the basis of standard direct labor-hours. Two direct labor-hours are
required for each unit produced. The denominator activity was set at 9,000 units.
Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this
cost was fixed. The 17,200 hours worked during the period resulted in production of
8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed
manufacturing overhead cost was $28,000.
The variable overhead rate variance for the period was:
A.$5,300 Unfavorable
B.$1,200 Unfavorable
C.$6,300 Unfavorable
D.$6,500 Unfavorable
