1) the mohawk-hudson company is an electric utility which has two service
departments, accounting and maintenance. it has two operating departments, generation
and transmission. the company does not distinguish between fixed and variable service
department costs. maintenance department costs are allocated on the basis of
maintenance hours. accounting department costs are allocated to operating departments
on the basis of accounting hours of service provided. budgeted costs and other data for
the coming year are as follows:
the step-down method is used to allocate service department costs, with the accounting
department being allocated first.
the amount of maintenance department cost allocated to the accounting department
would be:
a.$0
b.$69,315
c.$75,000
d.$88,000
2) legard 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 january, the kennel budgeted for
2,600 tenant-days, but its actual level of activity was 2,620 tenant-days. the kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for january:
the activity variance for wages and salaries in january would be closest to:
a.$158 f
b.$158 u
c.$102 u
d.$102 f
3) megenity company’s net income last year was $194,000. changes in the company’s
balance sheet accounts for the year appear below:
the company declared and paid cash dividends of $132,000 last year. the following
questions pertain to the company’s statement of cash flows.
the net cash provided by (used in) financing activities last year was:
a.$60,000
b.$(60,000)
c.$192,000
d.$(192,000)
4) botwinick corporation manufactures a variety of products. the following data pertain
to the company’s operations over the last two years:
what was the absorption costing net operating income this year?
a.$98,000
b.$36,000
c.$68,000
d.$66,000
5) excerpts from welshans corporation’s comparative balance sheet appear below:
which of the following classifications of changes in balance sheet accounts as sources
and uses is correct?
a.the change in accounts payable is a use; the change in accrued wages and salaries
payable is a source
b.the change in accounts payable is a source; the change in accrued wages and salaries
payable is a source
c.the change in accounts payable is a source; the change in accrued wages and salaries
payable is a use
d.the change in accounts payable is a use; the change in accrued wages and salaries
payable is a use
6) lindgren corporation’s most recent comparative balance sheet appears below:
the net cash provided by (used by) investing activities for the year was:
a.$77
b.($77)
c.$75
d.($75)
7) guasson corporation uses the weighted-average method in its process costing system.
this month, the beginning inventory in the first processing department consisted of 500
units. the costs and percentage completion of these units in beginning inventory were:
a total of 6,400 units were started and 5,800 units were transferred to the second
processing department during the month. the following costs were incurred in the first
processing department during the month:
the ending inventory was 85% complete with respect to materials and 50% complete
with respect to conversion costs.
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.
the cost per equivalent unit for conversion costs for the first department for the month is
closest to:
a.$41.26
b.$42.68
c.$44.84
d.$47.08
8) the costs that stewart company would classify as variable would be:
a.maintenance and supplies
b.maintenance, supplies, utilities, lubrication and advertising
c.supplies and advertising
d.maintenance, utilities and advertising
9) details of the manufacturing activity in amy company’s assembly department for the
month of december are given below:
all materials are added at the beginning of processing in the assembly department.
the equivalent units for material for the month, using the fifo method, is:
a.80,000
b.70,000
c.74,000
d.90,000
10) acton company has two products: a and b. annual production and sales are 800 units
of product a and 500 units of product b. the company has traditionally used direct
labor-hours as the basis for applying all manufacturing overhead to products. product a
requires 0.3 direct labor hours per unit and product b requires 0.2 direct labor hours per
unit. the total estimated overhead for next period is $92,023.
the company is considering switching to an activity-based costing system for the
purpose of computing unit product costs for external reports. the new activity-based
costing system would have three overhead activity cost poolsactivity 1, activity 2, and
general factorywith estimated overhead costs and expected activity as follows:
(note: the general factory activity cost pool’s costs are allocated on the basis of direct
labor hours.)
the overhead cost per unit of product a under the activity-based costing system is
closest to:
a.$86.97
b.$70.79
c.$81.20
d.$11.24
11) chaffey inc. has provided the following data for the month of january. there were no
beginning inventories; consequently, the direct materials, direct labor, and
manufacturing overhead applied listed below are all for the current month.
manufacturing overhead for the month was underapplied by $7,000.
the company allocates any underapplied or overapplied overhead among work in
process, finished goods, and cost of goods sold at the end of the month on the basis of
the overhead applied during the month in those accounts.
the work in process inventory at the end of january after allocation of any underapplied
or overapplied overhead for the month is closest to:
a.$5,975
b.$6,340
c.$5,920
d.$6,285
12) ingham draperies makes custom draperies for homes and businesses. the company
uses an activity-based costing system for its overhead costs. the company has provided
the following data concerning its annual overhead costs and its activity cost pools.
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
the amount of activity for the year is as follows:
required:
a. prepare the first-stage allocation of overhead costs to the activity cost pools by filling
in the table below:
b. compute the activity rates (i.e., cost per unit of activity) for the making drapes and
job support activity cost pools by filling in the table below:
c. prepare an action analysis report in good form of a job that involves making 67 yards
of drapes and has direct materials and direct labor cost of $2,030. the sales revenue
from this job is $6,600.
for purposes of this action analysis report, direct materials and direct labor should be
classified as a green cost; production overhead as a red cost; and office expense as a
yellow cost.
13) nimocks inc., which produces a single product, has provided the following data for
its most recent month of operation:
the company had no beginning or ending inventories.
required:
a. compute the unit product cost under absorption costing. show your work!
b. compute the unit product cost under variable costing. show your work!
14) 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:
what was the fixed manufacturing overhead budget variance for the period to the
nearest dollar?
a.$1,100 f
b.$350 f
c.$2,294 u
d.$2,650 u
15) which of the following statements is true for a company that uses variable costing?
a.the unit product cost changes because of changes in the number of units manufactured
b.profit fluctuates with sales
c.any underapplied overhead is included in the product cost
d.product costs include variable administration costs
16) the alpha company produces toys for national distribution. standards for a particular
toy are:
materials: 12 ounces per unit at 56 per ounce.
labor: 2 hours per unit at $2.75 per hour.
during the month of december, the company produced 1,000 units. information for the
month follows:
materials: 14,000 ounces were purchased and used at a total cost of $7,140.
labor: 2,500 hours worked at a total cost of $8,000.
the labor efficiency variance is:
a.$1,600 u
b.$1,375 u
c.$1,375 f
d.$1,600 f
17) venanzi air uses two measures of activity, flights and passengers, in the cost
formulas in its budgets and performance reports. the cost formula for plane operating
costs is $40,720 per month plus $2,646 per flight plus $11 per passenger. the company
expected its activity in september to be 62 flights and 288 passengers, but the actual
activity was 64 flights and 289 passengers. the actual cost for plane operating costs in
september was $214,430. the activity variance for plane operating costs in september
would be closest to:
a.$6,490 u
b.$5,303 f
c.$6,490 f
d.$5,303 u