1) Able Inc. uses the weighted-average method in its process costing system. The
following data concern the operations of the company’s first processing department for
a recent month.
Required:
a. Determine the equivalent units of production.
b. Determine the costs per equivalent unit.
c. Determine the cost of ending work in process inventory.
d. Determine the cost of the units transferred to the next department.
2) What is the net advantage or disadvantage to the company from upgrading the
computers rather than selling them in their present condition?
A.$20,000 advantage
B.$20,000 disadvantage
C.$60,000 advantage
D.$60,000 disadvantage
3) The company’s operating cycle for Year 2 is closest to:
A.66.2 days
B.16.5 days
C.95.3 days
D.45.6 days
4) Maraby Corporation’s working capital (in thousands of dollars) at the end of Year 2
was closest to:
A.$260
B.$620
C.$360
D.$990
5) Glassey Corporation uses activity-based costing to assign overhead costs to products.
Overhead costs have already been allocated to the company’s three activity cost pools as
follows: Processing, $20,000; Supervising, $33,500; and Other, $16,500. Processing
costs are assigned to products using machine-hours (MHs) and Supervising costs are
assigned to products using the number of batches. The costs in the Other activity cost
pool are not assigned to products. Activity data appear below:
What is the overhead cost assigned to Product T3 under activity-based costing?
A.$26,100
B.$19,400
C.$35,000
D.$6,700
6) Which of the following is correct regarding the operating activities section of the
statement of cash flows?
A.The change in Prepaid Expenses will be added to net income; The change in Income
Taxes Payable will be subtracted from net income
B.The change in Prepaid Expenses will be subtracted from net income; The change in
Income Taxes Payable will be subtracted from net income
C.The change in Prepaid Expenses will be subtracted from net income; The change in
Income Taxes Payable will be added to net income
D.The change in Prepaid Expenses will be added to net income; The change in Income
Taxes Payable will be added to net income
A decrease in a current asset such as prepaid expenses is added to net income.
7) Closser Corporation produces and sells two products. In the most recent month,
Product M50S had sales of $39,000 and variable expenses of $12,870. Product H50G
had sales of $12,000 and variable expenses of $4,980. The fixed expenses of the entire
company were $33,050. The break-even point for the entire company is closest to:
A.$50,846
B.$50,900
C.$17,950
D.$33,050
8) Ozogoz 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.
What are the equivalent units for conversion costs for the month in the first processing
department?
A.9,250
B.10,300
C.300
D.8,600
9) The inventory turnover for Year 2 is closest to:
A.3.75
B.1.20
C.4.09
D.0.83
10) Pevy Corporation has two divisions: Southern Division and Northern Division. The
following data are for the most recent operating period:
The common fixed expenses have been allocated to the divisions on the basis of sales.
The Northern Division’s break-even sales is closest to:
A.$104,400
B.$131,900
C.$86,250
D.$286,163
11) Vette Tie Corporation has developed the following manufacturing overhead
standards to use in applying overhead to the production of its hand-painted silk ties.
Manufacturing overhead at Vette is applied to production on the basis of standard direct
labor-hours (DLHs).
The above standards were based on an expected annual volume of 60,000 ties. The
actual results for last year were as follows:
What total amount of manufacturing overhead cost (variable and fixed) did Vette apply
to the 58,000 ties produced during the year?
A.$1,276,000
B.$1,403,600
C.$1,421,200
D.$1,452,000
12) What is the contribution margin per unit for normal sales?
A) $32.50
B) $8.40
C) $9.70
D) $7.20
13) What would be the effect on the company’s overall net operating income if product
V41B were dropped?
A.Overall net operating income would increase by $71,000.
B.Overall net operating income would increase by $132,000.
C.Overall net operating income would decrease by $132,000.
D.Overall net operating income would decrease by $71,000.
14) The following costs were incurred in April:
Conversion costs during the month totaled:
A) $39,000
B) $54,000
C) $105,000
D) $51,000