1) gargymal company would like to estimate the variable and fixed components of its
electrical costs and has compiled the following data for the last five months of
operations.
using the high-low method, the estimated monthly fixed component of the electrical
cost is:
a.$260
b.$235
c.$280
d.$800
2) emmette corporation uses an activity-based costing system with three activity cost
pools. the company has provided the following data concerning its costs and its activity
based costing system:
how much cost, in total, would be allocated in the first-stage allocation to the setting up
activity cost pool?
a.$325,000
b.$312,000
c.$333,000
d.$429,000
3) 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 budget variance is:
a.$3,500 f
b.$3,500 u
c.$3,200 f
d.$3,200 u
4) an increase in the discount rate:
a.will increase the present value of future cash flows
b.will have no effect on net present value
c.will reduce the present value of future cash flows
d.is one method of compensating for reduced risk
5) steckelberg inc. produces and sells a single product. the selling price of the product is
$150.00 per unit and its variable cost is $54.00 per unit. the fixed expense is $154,560
per month. the break-even in monthly unit sales is closest to:
a.1,610
b.1,030
c.1,834
d.2,862
6) tart corporation reported the following data for the month of september:
the conversion cost for september was:
a.$150,000
b.$103,000
c.$117,000
d.$86,000
7) woofter corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during january, the
company budgeted for 7,600 units, but its actual level of activity was 7,560 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for january:
the activity variance for net operating income in january would be closest to:
a.$12,816 f
b.$12,816 u
c.$536 f
d.$536 u
8) binsder company uses the weighted-average method in its process costing system.
the assembly department started the month with 9,000 units in its beginning work in
process inventory that were 40% complete with respect to conversion costs. an
additional 55,000 units were transferred in from the prior department during the month
to begin processing in the assembly department. there were 10,000 units in the ending
work in process inventory of the assembly department that were 50% complete with
respect to conversion costs.
what were the equivalent units for conversion costs in the assembly department for the
month?
a.54,000
b.56,000
c.59,000
d.55,400
9) righter corporation is considering six jobs for the upcoming period. those jobs are
listed below, along with relevant data.
the total amount of the constrained resource that is available during the upcoming
period is 66 hours.
required:
a. determine which jobs should be accepted for the upcoming period.
b. determine the total incremental profit for the upcoming period if your plan from part
(a) above is adopted.
10) hayase corporation processes sugar beets that it purchases from farmers. sugar beets
are processed in batches. a batch of sugar beets costs $35 to buy from farmers and $14
to crush in the company’s plant. two intermediate products, beet fiber and beet juice,
emerge from the crushing process. the beet fiber can be sold as is for $27 or processed
further for $11 to make the end product industrial fiber that is sold for $40. the beet
juice can be sold as is for $36 or processed further for $21 to make the end product
refined sugar that is sold for $46.
how much profit (loss) does the company make by processing the intermediate product
beet juice into refined sugar rather than selling it as is?
a.($11)
b.($25)
c.($36)
d.($60)
11) (ignore income taxes in this problem.) given the following data:
based on the data given, the annual cost savings would be:
a.$1,630.00
b.$2,200.00
c.$2,123.89
d.$2,553.89
12) the constraint at artis corporation is time on a particular machine. the company
makes three products that use this machine. data concerning those products appear
below:
assume that sufficient time is available on the constrained machine to satisfy demand
for all but the least profitable product. up to how much should the company be willing
to pay to acquire more of this constrained resource?
a.$12.40 per minute
b.$12.80 per unit
c.$15.10 per minute
d.$58.89 per unit
13) kimbril catering uses two measures of activity, jobs and meals, in the cost formulas
in its budgets and performance reports. the cost formula for catering supplies is $530
per month plus $91 per job plus $12 per meal. a typical job involves serving a number
of meals to guests at a corporate function or at a host’s home. the company expected its
activity in january to be 27 jobs and 174 meals, but the actual activity was 31 jobs and
173 meals. the actual cost for catering supplies in january was $5,330. the activity
variance for catering supplies in january would be closest to:
a.$255 f
b.$255 u
c.$352 f
d.$352 u
14) bourret corporation is introducing a new product whose direct materials cost is $42
per unit, direct labor cost is $16 per unit, variable manufacturing overhead is $9 per
unit, and variable selling and administrative expense is $3 per unit. the annual fixed
manufacturing overhead associated with the product is $84,000 and its annual fixed
selling and administrative expense is $16,000. management plans to produce and sell
4,000 units of the new product annually. the new product would require an investment
of $1,022,400 and has a required return on investment of 10%. management would like
to set the selling price on a new product using the absorption costing approach to
cost-plus pricing.
required:
a. determine the unit product cost for the new product.
b. determine the markup percentage on absorption cost for the new product.
c. determine the target selling price for the new product using the absorption costing
approach.
15) portsche snow removal’s cost formula for its vehicle operating cost is $2,310 per
month plus $317 per snow-day. for the month of november, the company planned for
activity of 18 snow-days, but the actual level of activity was 20 snow-days. the actual
vehicle operating cost for the month was $8,730. the activity variance for vehicle
operating cost in november would be closest to:
a.$714 u
b.$714 f
c.$634 f
d.$634 u
16) (ignore income taxes in this problem) digrande corporation is investigating buying a
small used aircraft for the use of its executives. the aircraft would have a useful life of 6
years. the company uses a discount rate of 12% in its capital budgeting. the net present
value of the investment, excluding the salvage value of the aircraft, is -$250,113.
management is having difficulty estimating the salvage value of the aircraft. to the
nearest whole dollar how large would the salvage value of the aircraft have to be to
make the investment in the aircraft financially attractive?
a.$30,014
b.$2,084,275
c.$250,113
d.$493,320
17) in a job-order costing system, the use of indirect materials would usually be
recorded as a debit to:
a.raw materials
b.work in process
c.manufacturing overhead
d.finished goods
18) campion company has two divisions, a and b. the following data pertain to
operations in may:
if common fixed expenses were $10,000, total fixed expenses were:
a.$10,000
b.$30,500
c.$40,500
d.$65,500
19) the most recent balance sheet and income statement of teramoto corporation appear
below:
cash dividends were $18.
the net cash provided by (used by) financing activities for the year was:
a.$1
b.($18)
c.($12)
d.$5
20) green company’s variable expenses are 75% of sales. at a sales level of $400,000,
the company’s degree of operating leverage is 8. at this sales level, fixed expenses are:
a.$87,500
b.$100,000
c.$50,000
d.$75,000