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1) (ignore income taxes in this problem.) the connelly company has funds available to
invest in the following project:
the working capital needed now would be released at the end of the seven years for
investment elsewhere.
consider only the cash flows for the third year. the present value of the net cash flows
(cash inflows less cash outflows) for this year only is:
a.$6,090
b.$36,540
c.$8,720
d.$30,450
2) feiner clinic uses client-visits as its measure of activity. during december, the clinic
budgeted for 2,200 client-visits, but its actual level of activity was 2,220 client-visits.
the clinic has provided the following data concerning the formulas to be used in its
budgeting:
the activity variance for personnel expenses in december would be closest to:
a.$4,024 f
b.$466 f
c.$466 u
d.$4,024 u
3) a furniture manufacturer has a standard costing system based on standard direct
labor-hours (dlhs) as 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:
how much overhead was applied to products during the period to the nearest dollar?
a.$19,680
b.$17,530
c.$18,040
d.$19,122
4) gloster company makes three products in a single facility. these products have the
following unit product costs:
the mixing machines are potentially the constraint in the production facility. a total of
27,400 minutes are available per month on these machines.
direct labor is a variable cost in this company.
required:
a. how many minutes of mixing machine time would be required to satisfy demand for
all three products?
b. how much of each product should be produced to maximize net operating income?
(round off to the nearest whole unit.)
c. up to how much should the company be willing to pay for one additional hour of
mixing machine time if the company has made the best use of the existing mixing
machine capacity? (round off to the nearest whole cent.)
5) the management of rathburn corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the
estimated amount of activity for the year. 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 activity for the year is 42,600 machine-hours. all of the manufacturing overhead
is fixed and is $848,820 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
and the actual amount of manufacturing overhead for the year. job f31i, which required
310 machine-hours, is one of the jobs worked on during the year.
required:
a. determine the predetermined overhead rate if the predetermined overhead rate is
based on the estimated amount of the allocation base.
b. determine how much overhead would be applied to job f31i if the predetermined
overhead rate is based on estimated amount of the allocation base.
c. determine the underapplied or overapplied overhead for the year if the predetermined
overhead rate is based on the estimated amount of the allocation base.
d. determine the predetermined overhead rate if the predetermined overhead rate is
based on the amount of the allocation base at capacity.
e. determine how much overhead would be applied to job f31i if the predetermined
overhead rate is based on the amount of the allocation base at capacity.
f. determine the underapplied or overapplied overhead for the year if the predetermined
overhead rate is based on the amount of the allocation base at capacity.
6) enriques corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during february, the
company budgeted for 5,000 units, but its actual level of activity was 4,990 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for february:
the activity variance for direct labor in february would be closest to:
a.$61 u
b.$1,081 u
c.$61 f
d.$1,081 f
7) the ferris company applies manufacturing overhead costs to products on the basis of
standard direct labor-hours. the standard cost card shows that 3 direct labor-hours are
required per unit of product. for august, the company budgeted to work 90,000 direct
labor-hours and to incur the following total manufacturing overhead costs:
during august, the company completed 28,000 units of product, worked 86,000 direct
labor-hours, and incurred the following total manufacturing overhead costs:
the denominator activity in the predetermined overhead rate is 90,000 direct
labor-hours.
for august, the fixed manufacturing overhead volume variance is:
a.$4,300 u
b.$7,920 u
c.$4,980 f
d.$4,980 u
8) van cleef company's comparative balance sheet and income statement for last year
appear below:
the company declared and paid $18,000 in cash dividends during the year. the company
uses the direct method to determine the net cash provided by operating activities.
on the statement of cash flows, the sales revenue adjusted to a cash basis would be:
a.$697,000
b.$720,000
c.$743,000
d.$774,000
9) the management of bauza 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 12,000 machine-hours. in addition, capacity is 14,000
machine-hours and the actual level of activity for the year is 11,400 machine-hours. all
of the manufacturing overhead is fixed and is $20,160 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.
if the company bases its predetermined overhead rate on capacity, the predetermined
overhead rate is closest to:
a.$1.68
b.$1.71
c.$1.44
d.$1.77
10) eccles corporation uses a job-order costing system and applies overhead to jobs
using a predetermined overhead rate. during the year the company's finished goods
inventory account was debited for $384,000 and credited for $325,900. the ending
balance in the finished goods inventory account was $72,100. at the end of the year,
manufacturing overhead was underapplied by $5,400.
the manufacturing overhead applied was:
a.$4,100
b.$3,300
c.$15,400
d.$9,100
11) which product would be selected in a decision that involves the utilization of a
constrained resource?
a.the product with the lowest total cost per unit
b.the product with the lowest variable cost per unit
c.the product that uses the least amount of constrained resource per unit
d.the product with the highest contribution margin per unit
e.the product with the highest contribution margin per unit of the constrained resource
12) guynn corporation's most recent balance sheet and income statement appear below:
dividends on common stock during year 2 totaled $10 thousand. dividends on preferred
stock totaled $5 thousand. the market price of common stock at the end of year 2 was
$7.05 per share.
the earnings per share of common stock for year 2 is closest to:
a.$0.79
b.$0.50
c.$1.14
d.$0.55
