1) excerpts from stys corporation’s most recent balance sheet and income statement
appear below:
dividends on common stock during year 2 totaled $50 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$8.20 per share.
the price-earnings ratio for year 2 is closest to:
a.5.22
b.7.45
c.8.20
d.4.43
2) kronstedt corporation has a standard cost system in which it applies manufacturing
overhead to products on the basis of standard machine-hours (mhs). the company has
provided the following data for the most recent month:
what was the variable overhead rate variance for the month?
a.$710 unfavorable
b.$1,340 unfavorable
c.$630 favorable
d.$3,000 unfavorable
3) wable inc. has provided the following data to be used in evaluating a proposed
investment project:
for tax purposes, the entire initial investment without any reduction for salvage value
will be depreciated over 5 years. the company uses a discount rate of 16%.
the net present value of the project is closest to:
a.$24,931
b.-$67,326
c.-$83,111
d.$40,716
4) cherrington company uses a process costing system. for may, the month just
completed, the beginning work in process inventory consisted of 50,000 units which
were 60% complete with respect to conversion costs. the ending inventory for the
month was 20% complete with respect to conversion costs. a summary of cost data for
the month follows:
assuming that cherrington company uses the fifo method, what is the cost per
equivalent unit for conversion costs for may to the nearest cent?
a.$4.31
b.$3.49
c.$4.29
d.$4.11
5) blomstrom products inc. makes two productsn81w and v55s. product n81w’s selling
price is $20.00 and its unit variable cost is $12.00. product v55s’s selling price is
$108.00 and its unit variable cost is $97.20. the monthly demand is 3,940 units for
product n81w and 1,140 units for v55s. the constrained resource is a particular machine
that is available for 10,400 minutes each month. each unit of product n81w requires 2
minutes on this machine and each unit of product v55s requires 6 minutes on this
machine.
the company is considering launching a new product that would have a variable cost of
$155.00 per unit and no avoidable fixed costs. it would require 5 minutes of the
constrained resource. the absolute minimum acceptable selling price for the new
product should be:
a.$175.00
b.$156.80
c.$164.00
d.$155.00
6) the constrained resource at schiller corporation is a key raw material. a total of 9,900
ounces of the constrained resource are available. data concerning the company’s two
products follow:
product f57 requires 15 ounces of the constrained resource; product i66 requires 5
ounces.
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) balance sheet accounts for hollis, inc. contained the following amounts at the ends of
years 1 and 2:
the company’s income statement for year 2 follows:
there were no sales or retirements of plant and equipment in year 2. cash dividends of
$5,000 were paid during year 2. the company pays no income taxes. the company uses
the direct method to determine the net cash provided by operating activities on the
statement of cash flows.
the net cash provided by operating activities for year 2 would be:
a.$14,500
b.$30,000
c.$18,500
d.$27,500
8) wable inc. has provided the following data to be used in evaluating a proposed
investment project:
for tax purposes, the entire initial investment without any reduction for salvage value
will be depreciated over 5 years. the company uses a discount rate of 16%.
when computing the net present value of the project, what is the annual amount of the
depreciation tax shield? in other words, by how much does the depreciation deduction
reduce taxes each year in which the depreciation deduction is taken?
a.$27,500
b.$77,000
c.$33,000
d.$64,167
9) baugus corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during august, the
company budgeted for 6,900 units, but its actual level of activity was 6,950 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for august:
the activity variance for direct labor in august would be closest to:
a.$1,220 f
b.$210 u
c.$210 f
d.$1,220 u
10) financial statements of farnham corporation follow:
cash dividends were $3.
the net cash provided by (used by) financing activities for the year was:
a.$7
b.($3)
c.$5
d.$1
11) data from gofman corporation’s most recent balance sheet appear below:
sales on account in year 2 amounted to $1,300 and the cost of goods sold was $900.
the acid-test ratio at the end of year 2 is closest to:
a.1.39
b.2.78
c.1.44
d.0.94
12) which of the following would be classified as an external failure cost on a quality
cost report?
a.debugging software errors
b.final product testing and inspection
c.depreciation of test equipment
d.liability arising from defective products
13) cotty clinic uses client-visits as its measure of activity. during march, the clinic
budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for march:
the administrative expenses in the planning budget for march would be closest to:
a.$6,288
b.$6,300
c.$6,418
d.$6,483
14) the tolar company has 400 obsolete desk calculators that are carried in inventory at
a total cost of $26,800. if these calculators are upgraded at a total cost of $10,000, they
can be sold for a total of $30,000. as an alternative, the calculators can be sold in their
present condition for $11,200.
assume that tolar decides to upgrade the calculators. at what selling price per unit would
the company be as well off as if it just sold the calculators in their present condition?
a.$8
b.$30
c.$53
d.$67
15) smithson clinic uses client-visits as its measure of activity. during may, the clinic
budgeted for 3,300 client-visits, but its actual level of activity was 3,270 client-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for may:
the medical supplies in the flexible budget for may would be closest to:
a.$14,907
b.$15,488
c.$15,207
d.$15,030
16) qtech corporation uses the fifo 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.
the cost per equivalent unit for conversion costs for the first department for the month is
closest to:
a.$34.72
b.$33.52
c.$36.67
d.$31.92
17) at an activity level of 10,000 units, variable costs totaled $35,000 and fixed costs
totaled $20,800. if 16,000 units are produced and this activity is within the relevant
range, then:
a.total cost would equal $89,280
b.total unit cost would equal $4.80
c.fixed cost per unit would equal $5.58
d.total costs would equal $55,800
18) mieras inc. has provided the following data for the month of november. 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 $2,000.
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 journal entry to record the allocation of any underapplied or overapplied overhead
for november would include the following:
a.credit to work in process of $140
b.debit to work in process of $140
c.credit to work in process of $13,670
d.debit to work in process of $13,670
19) the following materials standards have been established for a particular product:
the following data pertain to operations concerning the product for the last month:
required:
a. what is the materials price variance for the month?
b. what is the materials quantity variance for the month?
20) (ignore income taxes in this problem.) glassett corporation is considering a project
that would require an investment of $62,000. no other cash outflows would be involved.
the present value of the cash inflows would be $70,060. the profitability index of the
project is closest to:
a.0.13
b.1.13
c.0.87
d.0.12