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Selected financial data from Osterville Company for the most recent year appear below:
The income tax rate is 40%.
Net operating income as a percentage of sales was:
A. 40%
B. 30%
C. 10%
D. 5%
Answer:
Scheidel Enterprises, Inc. produces and sells a single product whose selling price is
$190.00 per unit and whose variable expense is $81.70 per unit. The company's
monthly fixed expense is $682,290.
Assume the company's monthly target profit is $21,000. The unit sales to attain that
target profit are closest to:
A. 8,608 units
B. 6,494 units
C. 6,268 units
D. 3,702 units
Answer:
Swiatek Corporation produces a single product and has the following cost structure:
The variable costing unit product cost is:
A. $161
B. $225
C. $153
D. $158
Answer:
Scheney Company uses the weighted-average method in its process costing system. The
company's work in process inventory on March 31 consisted of 20,000 units. The units
in the ending work in process inventory were 100% complete with respect to materials
and 70% complete with respect to labor and overhead. If the cost per equivalent unit for
March was $2.50 for materials and $4.75 for labor and overhead, the total cost in the
March 31 work in process inventory was:
A. $145,000
B. $116,500
C. $101,500
D. $78,500
Answer:
Smotherman Corporation produces and sells a single product. Data concerning that
product appear below:
The break-even in monthly unit sales is closest to:
A. 2,194 units
B. 3,676 units
C. 1,176 units
D. 1,730 units
Answer:
Average maintenance costs are $1.50 per machine-hour at an activity level of 8,000
machine-hours and $1.20 per machine-hour at an activity level of 13,000
machine-hours. Assuming that this activity is within the relevant range, total expected
maintenance cost for a budgeted activity level of 10,000 machine-hours would be
closest to:
A. $16,128
B. $15,000
C. $13,440
D. $11,433
Answer:
The Cabinet Shoppe is considering the addition of a new line of kitchen cabinets to its
current product lines. Expected cost and revenue data for the new cabinets are as
follows:
If the new cabinets are added, it is expected that the contribution margin of other
product lines at the cabinet shop will drop by $20,000 per year.
If the new cabinet product line is added next year, the increase in net operating income
resulting from this decision would be:
A. $80,000
B. $225,000
C. $125,000
D. $105,000
Answer:
Part I51 is used in one of Pries Corporation's products. The company makes 18,000
units of this part each year. The company's Accounting Department reports the
following costs of producing the part at this level of activity:
An outside supplier has offered to produce this part and sell it to the company for
$15.80 each. If this offer is accepted, the supervisor's salary and all of the variable
costs, including direct labor, can be avoided. The special equipment used to make the
part was purchased many years ago and has no salvage value or other use. The allocated
general overhead represents fixed costs of the entire company. If the outside supplier's
offer were accepted, only $26,000 of these allocated general overhead costs would be
avoided.
If management decides to buy part I51 from the outside supplier rather than to continue
making the part, what would be the annual impact on the company's overall net
operating income?
A. Net operating income would decline by $81,800 per year.
B. Net operating income would decline by $55,800 per year.
C. Net operating income would decline by $119,800 per year.
D. Net operating income would decline by $29,800 per year.
Answer:
Reference: 8B-2
Bordes Corporation has provided the following data concerning its most important raw
material, compound R85F:
The raw material was purchased on account.
The credits to the Raw Materials account for May would total:
A) $75,240
B) $77,880
C) $58,596
D) $53,808
Answer:
Lothian Corporation uses the weighted-average 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.
What are the equivalent units for materials for the month in the first processing
department?
A. 5,200
B. 325
C. 5,525
D. 5,700
Answer:
Data from Kempen Corporation's most recent balance sheet and the company's income
statement appear below:
The times interest earned for Year 2 is closest to:
A. 3.45
B. 6.36
C. 4.45
D. 2.42
Answer:
Olaf Corporation prepares its statement of cash flows using the direct method. The
following items were listed on Olaf's income statement. Which of these items would
also be listed in the operating activities section of Olaf's statement of cash flows?
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
Toye Corporation has provided its contribution format income statement for March.
The degree of operating leverage is closest to:
A. 0.16
B. 0.05
C. 18.62
D. 6.34
Answer:
Dosier 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 fixed manufacturing overhead budget variance for the month?
A) $2,000 unfavorable
B) $2,000 favorable
C) $610 unfavorable
D) $610 favorable
Answer:
Trecroci Corporation applies manufacturing overhead to products on the basis of
standard machine-hours. The company bases its predetermined overhead rate on 2,500
machine-hours. The company's total budgeted fixed manufacturing overhead is $5,750.
In the most recent month, the total actual fixed manufacturing overhead was $6,030.
The company actually worked 2,600 machine-hours during the month. The standard
hours allowed for the actual output of the month totaled 2,490 machine-hours. What
was the overall fixed manufacturing overhead volume variance for the month?
A. $230 favorable
B. $280 unfavorable
C. $23 unfavorable
D. $230 unfavorable
Answer:
Temores Corporation applies manufacturing overhead to products on the basis of
standard machine-hours. The company's predetermined overhead rate for fixed
manufacturing overhead is $1.50 per machine-hour and the denominator level of
activity is 5,600 machine-hours. In the most recent month, the total actual fixed
manufacturing overhead was $8,510 and the company actually worked 5,840
machine-hours during the month. The standard hours allowed for the actual output of
the month totaled 5,980 machine-hours. What was the overall fixed manufacturing
overhead volume variance for the month?
A. $360 favorable
B. $360 unfavorable
C. $570 favorable
D. $210 favorable
Answer:
Financial statements of Ansbro Corporation follow:
Cash dividends were $14. The company did not dispose of any property, plant, and
equipment. It did not issue any bonds payable or repurchase any of its own common
stock. The following question pertain to the company's statement of cash flows.
The net cash provided by (used in) operating activities for the year was:
A. $54
B. $80
C. $58
D. $2
Answer:
Grosseiller Corporation uses the weighted-average method in its process costing
system. This month, the beginning inventory in the first processing department
consisted of 900 units. The costs and percentage completion of these units in beginning
inventory were:
A total of 6,400 units were started and 5,200 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 65% complete with respect to materials and 15% 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. $26.89
B. $22.34
C. $31.05
D. $29.57
Answer:
Paxton Corp has provided the following data concerning its operations last month:
Paxton Corp is a retailing organization.
The operating leverage is:
A. 3
B. 8
C. 0.33
D. 5
Answer:
Davol Corporation is preparing its Manufacturing Overhead Budget for the fourth
quarter of the year. The budgeted variable manufacturing overhead rate is $6.80 per
direct labor-hour; the budgeted fixed manufacturing overhead is $72,000 per month, of
which $20,000 is factory depreciation.
If the budgeted direct labor time for October is 5,000 hours, then the total budgeted
manufacturing overhead for October is:
A. $52,000
B. $106,000
C. $54,000
D. $86,000
Answer:
Chace Products is a division of a major corporation. Last year the division had total
sales of $21,300,000, net operating income of $575,100, and average operating assets of
$5,000,000. The company's minimum required rate of return is 12%.
The division's turnover is closest to:
A. 3.82
B. 4.26
C. 0.12
D. 37.04
Answer:
Excerpts from Goodrow Corporation's most recent balance sheet and income statement
appear below:
Dividends on common stock during Year 2 totaled $20 thousand. Dividends on
preferred stock totaled $10 thousand. The market price of common stock at the end of
Year 2 was $5.34 per share.
The book value per share at the end of Year 2 is closest to:
A. $0.30
B. $3.05
C. $6.10
D. $3.55
Answer:
Deboer Company, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the total period cost for the month under the absorption costing approach?
A. $8,400
B. $17,600
C. $26,000
D. $13,600
Answer:
Casper Corporation makes and sells a product called a Miniwarp. One Miniwarp
requires 3.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps
for the next five months is as follows:
The company wants to maintain monthly ending inventories of Jurislon equal to 10% of
the following month's production needs. On July 31, this requirement was not met since
only 6,900 kilograms of Jurislon were on hand. The cost of Jurislon is $3.00 per
kilogram. The company wants to prepare a Direct Materials Purchase Budget for the
next five months.
The total cost of Jurislon to be purchased in August is:
A. $233,625
B. $407,700
C. $214,200
D. $212,925
Answer:
Hartzog Corporation's most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $60 thousand. Dividends on
preferred stock totaled $5 thousand. The market price of common stock at the end of
Year 2 was $7.04 per share.
The times interest earned for Year 2 is closest to:
A. 3.40
B. 8.34
C. 4.84
D. 5.84
Answer:
Excerpts from Goodrow Corporation's most recent balance sheet and income statement
appear below:
Dividends on common stock during Year 2 totaled $20 thousand. Dividends on
preferred stock totaled $10 thousand. The market price of common stock at the end of
Year 2 was $5.34 per share.
The earnings per share of common stock for Year 2 is closest to:
A. $0.35
B. $0.50
C. $0.30
D. $0.65
Answer:
Sugiki Corporation has two divisions: the Alpha Division and the Delta Division. The
Alpha Division has sales of $820,000, variable expenses of $369,000, and traceable
fixed expenses of $347,300. The Delta Division has sales of $460,000, variable
expenses of $294,400, and traceable fixed expenses of $134,100. The total amount of
common fixed expenses not traceable to the individual divisions is $97,300. What is the
company's net operating income?
A. $135,200
B. $37,900
C. $616,600
D. $519,300
Answer:
A manufacturer of tiling grout has supplied the following data:
The company's degree of operating leverage is closest to:
A. 8.64
B. 1.55
C. 4.00
D. 1.08
Answer:
Reference: 8-49
Pikus Corporation makes a product that has the following direct labor standards:
In January the companys budgeted production was 3,400 units, but the actual
production was 3,500 units. The company used 640 direct labor-hours to produce this
output. The actual direct labor cost was $8,960.
The labor rate variance for January is:
A) $700 F
B) $640 U
C) $640 F
D) $700 U
Answer:
How much overhead was applied to products during the period to the nearest dollar?
A) $128,140
B) $130,601
C) $130,900
D) $127,160
Answer:
Sartain Corporation is in the process of preparing its annual budget. The following
beginning and ending inventory levels are planned for the year.
Each unit of finished goods requires 2 grams of raw material.
If the company plans to sell 670,000 units during the year, the number of units it would
have to manufacture during the year would be:
A. 670,000 units
B. 720,000 units
C. 740,000 units
D. 620,000 units
Answer:
