1) (ignore income taxes in this problem.) a company with $800,000 in operating assets
is considering the purchase of a machine that costs $75,000 and which is expected to
reduce operating costs by $20,000 each year. the payback period for this machine in
years is closest to:
a.0.27 years
b.10.7 years
c.3.75 years
d.40 years
2) deleston boat wash’s cost formula for its cleaning equipment and supplies is $2,150
per month plus $21 per boat. for the month of september, the company planned for
activity of 79 boats, but the actual level of activity was 39 boats. the actual cleaning
equipment and supplies for the month was $3,110.
the activity variance for cleaning equipment and supplies in september would be closest
to:
a.$840 f
b.$699 f
c.$699 u
d.$840 u
3) pasternack corporation recently changed the selling price of one of its products. data
concerning sales for comparable periods before and after the price change are presented
below.
the product’s variable cost is $23.10 per unit.
required:
a. compute the product’s price elasticity of demand as defined in the text.
b. compute the product’s profit-maximizing price according to the formula in the text.
4) kaaihue detailing’s cost formula for its materials and supplies is $2,750 per month
plus $17 per vehicle. for the month of april, the company planned for activity of 95
vehicles, but the actual level of activity was 135 vehicles. the actual materials and
supplies for the month was $4,850.
the materials and supplies in the flexible budget for april would be closest to:
a.$6,203
b.$4,850
c.$4,365
d.$5,045
5) baken corporation applies manufacturing overhead on the basis of direct labor-hours.
at the beginning of the most recent year, the company based its predetermined overhead
rate on total estimated overhead of $172,140 and 3,800 estimated direct labor-hours.
actual manufacturing overhead for the year amounted to $171,000 and actual direct
labor-hours were 3,880.
the predetermined overhead rate for the year was closest to:
a.$45.00
b.$44.07
c.$46.25
d.$45.30
6) a company that makes organic fertilizer has supplied the following data:
the company’s degree of operating leverage is closest to:
a.1.27
b.26.90
c.3.45
d.12.41
7) the pdq company makes collections on credit sales according to the following
schedule:
25% in month of sale
70% in month following sale
4% in second month following sale
1% uncollectible
the following sales have been budgeted:
cash collections in june would be:
a.$113,400
b.$110,000
c.$111,000
d.$115,500
8) in january, one of the processing departments at sessum corporation had beginning
work in process inventory of $17,000. during the month, $172,000 of costs were added
to production and the cost of units transferred out from the department was $178,000.
the company uses the fifo method in its process costing system.
in the department’s cost reconciliation report for january, the total cost to be accounted
for would be:
a.$361,000
b.$189,000
c.$28,000
d.$378,000
9) faxon 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 variable costing?
a.$2,300
b.$(600)
c.$9,300
d.$11,600
10) mafli company, which has only one product, has provided the following data
concerning its most recent month of operations:
required:
a. what is the unit product cost for the month under variable costing?
b. what is the unit product cost for the month under absorption costing?
c. prepare a contribution format income statement for the month using variable costing.
d. prepare an income statement for the month using absorption costing.
e. reconcile the variable costing and absorption costing net operating incomes for the
month.
11) 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 wages and salaries in the planning budget for january would be closest to:
a.$24,040
b.$23,755
c.$23,938
d.$24,198
12) using the following data for august, calculate the cost of goods manufactured:
the cost of goods manufactured was:
a.$106,000
b.$92,000
c.$95,000
d.$89,000
13) burdic company’s net income last year was $70,000. changes in the company’s
balance sheet accounts for the year appear below:
the company declared and paid cash dividends of $31,000 last year.
required:
a. construct the operating activities section of the company’s statement of cash flows for
the year. (use the indirect method.)
b. construct the investing activities section of the company’s statement of cash flows for
the year.
c. construct the financing activities section of the company’s statement of cash flows for
the year.
14) the koski company has established standards as follows:
actual production figures for the past year were as follows:
the materials quantity variance is:
a.$400 u
b.$410 f
c.$410 u
d.$6,000 u