1) If the Tudor Retailing Company uses the high-low method of analysis, the total
selling and administrative expense if Tudor Retailing Company sells 6,500 units during
a month would be estimated to be:
A) $37,000
B) $44,850
C) $38,250
D) $36,679
2) Muzyka 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.
What are the equivalent units for materials for the month in the first processing
department?
A.4,500
B.5,600
C.400
D.4,945
3) The following are budgeted data for the Bingham Corporation, a merchandising
company:
Assume that all purchases are paid for in the month following the month of purchase.
The cash disbursements for purchases that would appear in the April cash budget would
be:
A.$180,000
B.$157,500
C.$240,000
D.$217,500
4) Last year the Uptown Division of Gorcen Enterprises had sales of $300,000 and a net
operating income of $24,000. The average operating assets at Uptown last year
amounted to $120,000.
Last year at Uptown the return on investment was:
A.8%
B.12%
C.20%
D.40%
5) If the company bases its predetermined overhead rate on the estimated amount of the
allocation base for the upcoming year, the predetermined overhead rate is closest to:
The management of Aamot Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. The company’s controller
has provided an example to illustrate how this new system would work. In this
example, the allocation base is machine-hours and the estimated amount of the
allocation base for the upcoming year is 43,000 machine-hours. In addition, capacity is
47,000 machine-hours and the actual level of activity for the year is 42,100
machine-hours. All of the manufacturing overhead is fixed and is $828,610 per year.
For simplicity, it is assumed that this is the estimated manufacturing overhead for the
year as well as the manufacturing overhead at capacity. It is further assumed that this is
also the actual amount of manufacturing overhead for the year.
A.$19.68
B.$19.27
C.$19.14
D.$17.63
6) Merle Corporation applies manufacturing overhead to products on the basis of
standard machine-hours. For the most recent month, the company based its budget on
4,000 machine-hours. Budgeted and actual overhead costs for the month appear below:
The company actually worked 3,690 machine-hours during the month. The standard
hours allowed for the actual output were 3,620 machine-hours for the month. What was
the overall variable overhead efficiency variance for the month?
A.$721 Unfavorable
B.$467 Favorable
C.$254 Unfavorable
D.$880 Favorable
7) Sagon Corporation manufactures and sells one product. The following information
pertains to the company’s first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 29,000 units and sold 23,000 units. The company’s only product is sold for
$231 per unit.
The company is considering using either super-variable costing or a variable costing
system that assigns $25 of direct labor cost to each unit that is produced. Which of the
following statements is true regarding the net operating income in the first year?
A.Super-variable costing net operating income exceeds variable costing net operating
income by $150,000.
B.Super-variable costing net operating income exceeds variable costing net operating
income by $336,000.
C.Variable costing net operating income exceeds super-variable costing net operating
income by $336,000.
D.Variable costing net operating income exceeds super-variable costing net operating
income by $150,000.
8) What is the differential cost of Alternative Y over Alternative X, including all of the
relevant costs?
A.$122,000
B.$136,000
C.$108,000
D.$28,000
9) Grogam Catering uses activity-based costing for its overhead costs. The company
has provided the following data concerning the activity rates in its activity-based
costing system:
The number of meals served is the measure of activity for the Preparing Meals activity
cost pool. The number of functions catered is used as the activity measure for the
Arranging Functions activity cost pool.
Management would like to know whether the company made any money on a recent
function at which 100 meals were served. The company catered the function for a fixed
price of $21 per meal. The cost of the raw ingredients for the meals was $25 per meal.
This cost is in addition to the costs of wages, supplies, and other expenses detailed
above.
For the purposes of preparing action analyses, management has assigned ease of
adjustment codes to the costs as follows: wages are classified as a Yellow cost; supplies
and raw ingredients as a Green cost; and other expenses as a Red cost.
Suppose an action analysis report is prepared for the function mentioned above. What
would be the “yellow margin” in the action analysis report? (Round to the nearest whole
dollar.)
A.$635
B.$815
C.$710
D.$760
10) Grisham Corporation produces and sells a single product. The company has
provided its contribution format income statement for February.
If the company sells 5,700 units, its net operating income should be closest to:
A.$20,400
B.$22,700
C.$20,764
D.$26,800
11) The working capital at the end of Year 2 is:
A.$270
B.$500
C.$770
D.$740
12) The market price of Friden Company’s common stock increased from $15 to $18.
Earnings per share of common stock remained unchanged. The company’s
price-earnings ratio would:
A.increase.
B.decrease.
C.remain unchanged.
D.impossible to determine.
13) If P is processed further and then sold, rather than being sold at the split-off point,
the change in monthly net operating income would be a:
A) $147,000 decrease
B) $147,000 increase
C) $39,000 increase
D) $39,000 decrease
14) Sweitzer Corporation’s Maintenance Department provides services to the company’s
two operating divisions–the Paints Division and the Stains Division. The variable costs
of the Maintenance Department are budgeted based on the number of cases produced by
the operating departments. The fixed costs of the Maintenance Department are
determined based on the number of cases produced by the operating departments during
the peak-period. Data appear below:
Required:
a. Prepare a report showing how much of the Maintenance Department’s costs should be
charged to each of the operating divisions at the end of the year.
b. How much of the actual Maintenance Department costs should not be charged to the
operating divisions at the end of the year? Who should be held responsible for these
uncharged costs?
