1) Mars Corporation has provided the following data for Year 2:
The company’s total stockholders’ equity at the end of Year 2 amounted to $1,095,000
and at the end of Year 1 to $1,060,000. The company’s return on equity for Year 2 is
closest to:
A.5.91%
B.7.40%
C.3.84%
D.71.20%
2) The company’s current ratio at the end of Year 2 is closest to:
A.0.83
B.1.96
C.0.45
D.0.37
3) The net cash provided by (used in) investing activities last year was:
A.$30,000
B.$(30,000)
C.$(40,000)
D.$40,000
4) Betterton Corporation uses an activity based costing system to assign overhead costs
to products. In the first stage, two overhead costs-equipment depreciation and
supervisory expense-are allocated to three activity cost pools-Machining, Order Filling,
and Other-based on resource consumption. Data to perform these allocations appear
below:
In the second stage, Machining costs are assigned to products using machine-hours
(MHs) and Order Filling costs are assigned to products using the number of orders. The
costs in the Other activity cost pool are not assigned to products. Activity data for the
company’s two products follow:
How much overhead cost is allocated to the Machining activity cost pool under
activity-based costing in the first stage of allocation?
A.$300
B.$11,300
C.$24,500
D.$24,800
5) Oddo Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in December.
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 variable overhead efficiency variance for December is:
A.$1,122 F
B.$1,122 U
C.$1,100 F
D.$1,100 U
6) Information about units processed and processing costs incurred during a recent
month in the Refining Department of a manufacturing company follow:
The beginning work in process inventory included $11,000 of conversion cost. During
the month, the Department incurred an additional $290,000 in conversion costs.
Assuming that the company uses the FIFO method, what are the equivalent units for
conversion costs for the Blending Department for the month?
A.119,100
B.111,950
C.115,250
D.114,000
7) Dorris Corporation’s balance sheet and income statement appear below:
Cash dividends were $7. The company sold equipment for $18 that was originally
purchased for $8 and that had accumulated depreciation of $6. The net cash provided by
(used in) operating activities for the year was:
A.$34
B.$35
C.$50
D.$41
8) The Fraley Corporation, a merchandising firm, has planned the following sales for
the next four months:
Sales are made 40% for cash and 60% on account. From experience, the company has
learned that a month’s sales on account are collected according to the following pattern:
The company requires a minimum cash balance of $4,000 to start a month.
Required:
a. Compute the budgeted cash receipts for June.
b. Assume the following budgeted data for June:
Using this data, along with your answer to part (a) above, prepare a cash budget for
June. Clearly show any borrowing needed during the month. The company can borrow
in any dollar amount, but will not pay any interest until the following month.
9) Cutterski Corporation manufactures a propeller. Shown below is Cutterski’s cost
structure:
In its first year of operations, Cutterski produced 60,000 propellers but only sold
54,000.
Which costing method (variable or absorption) will generate a higher net operating
income in Cutterski’s first year of operations and by how much?
A.variable by $81,000
B.variable by $108,000
C.absorption by $81,000
D.absorption by $108,000
10) The company’s return on total assets for Year 2 is closest to:
A.1.38%
B.2.18%
C.1.37%
D.2.19%
11) The company’s dividend yield ratio for Year 2 is closest to:
A.21.1%
B.2.6%
C.1.6%
D.14.7%
12) Dixie Corporation has provided the following data for June.
Required:
a. Compute the budget variance for June. Show your work!
b. Compute the volume variance for June. Show your work!
13) Farron Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the net operating income for the month under absorption costing?
A.$(17,000)
B.$16,600
C.$6,000
D.$10,600
14) The total cash flow net of income taxes in year 2 is:
A.$90,000
B.$76,000
C.$108,500
D.$140,000
15) (Ignore income taxes in this problem) The management of Kiefert Corporation is
investigating an investment in equipment that would have a useful life of 9 years. The
company uses a discount rate of 18% in its capital budgeting. The net present value of
the investment, excluding the annual cash inflow, is -$290,453. To the nearest whole
dollar how large would the annual cash inflow have to be to make the investment in the
equipment financially attractive?
A.$32,273
B.$67,500
C.$52,282
D.$290,453
16) Gary Corporation produces products X, Y, and Z from a single raw material input.
Budgeted data for the next month is as follows:
If the cost of raw material input is $150,000, which of the products should be processed
beyond the split-off point?
Product X Product Y Product Z
A) no yes no
B) no yes yes
C) yes no yes
D) yes yes no
17) Adi Manufacturing Corporation is estimating the following raw material purchases
for the final four months of the year:
At Adi, 30% of raw materials purchases are normally paid for in the month of purchase.
The remaining 70% is paid for in the month following the purchase.
How much cash should Adi expect to pay out for raw material purchases during
November?
A.$896,000
B.$392,000
C.$644,000
D.$252,000
18) The Prattle Corporation makes and sells only one product called a Deb. The
company is in the process of preparing its Selling and Administrative Expense Budget
for next year. The following budget data are available:
All of these expenses (except depreciation) are paid in cash in the month they are
incurred.
If the company has budgeted to sell 17,000 Debs in January, then the total budgeted
variable selling and administrative expenses for January will be:
A.$34,000
B.$39,100
C.$18,700
D.$25,500
19) ( Jason Corporation has invested in a machine that cost $80,000, that has a useful
life of eight years, and that has no salvage value at the end of its useful life. The
machine is being depreciated by the straight-line method, based on its useful life. It will
have a payback period of five years. Given these data, the simple rate of return on the
machine is closest to:
A.6.8%
B.7.5%
C.9%
D.12%
20) Orem Corporation’s current liabilities are $75,000, its long-term liabilities are
$225,000, and its working capital is $100,000. If the corporation’s debt-to-equity ratio is
0.30, total long-term assets must equal:
A.$1,000,000
B.$1,300,000
C.$1,125,000
D.$1,225,000