1) bosril corporation uses the weighted-average method in its process costing system.
this month, the beginning inventory in the first processing department consisted of 400
units. the costs and percentage completion of these units in beginning inventory were:
a total of 5,600 units were started and 4,900 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 85% complete with respect to materials and 45% 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.
what are the equivalent units for conversion costs for the month in the first processing
department?
a.6,000
b.5,395
c.4,900
d.495
2) placek hospital bases its budgets on patient-visits. the hospital’s static budget for
october appears below:
the total overhead cost at an activity level of 7,700 patient-visits per month should be:
a.$129,550
b.$121,720
c.$129,100
d.$137,830
3) drabant kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during february, the kennel budgeted
for 2,000 tenant-days, but its actual level of activity was 2,040 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for february:
the facility expenses in the flexible budget for february would be closest to:
a.$13,700
b.$13,401
c.$13,788
d.$12,880
4) albro corporation keeps careful track of the time required to fill orders. the times
recorded for a particular order appear below:
the throughput time was:
a.4.3 hours
b.31.6 hours
c.27.3 hours
d.11.5 hours
5) cherrington company uses a process costing system. for may, the month just
completed, the beginning work in process inventory consisted of 50,000 units which
were 60% complete with respect to conversion costs. the ending inventory for the
month was 20% complete with respect to conversion costs. a summary of cost data for
the month follows:
assuming that cherrington company uses the weighted-average method, what is the cost
per equivalent unit for conversion costs for may to the nearest whole cent?
a.$4.19
b.$4.00
c.$3.64
d.$3.83
6) jemsen 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.
the cost per equivalent unit for materials for the month in the first processing
department is closest to:
a.$9.94
b.$9.74
c.$10.16
d.$9.54
7) financial statements for marcalo company appear below:
marcalo company’s inventory turnover for year 2 was closest to:
a.12.4
b.12.2
c.17.8
d.8.5
8) paul company used a predetermined overhead rate during the year just completed of
$3.50 per direct labor-hour, based on an estimate of 22,000 direct labor-hours to be
worked during the year. actual overhead cost and activity during the year were:
the underapplied or overapplied overhead for the year would be:
a.$13,000 underapplied
b.$10,500 overapplied
c.$2,500 overapplied
d.$2,500 underapplied
9) (ignore income taxes in this problem.) the management of morrissette corporation is
considering a project that would require an investment of $284,000 and would last for 7
years. the annual net operating income from the project would be $135,000, which
includes depreciation of $37,000. the scrap value of the project’s assets at the end of the
project would be $25,000. the payback period of the project is closest to:
a.2.1 years
b.1.5 years
c.1.9 years
d.1.7 years
10) ofarrell snow removal’s cost formula for its vehicle operating cost is $1,840 per
month plus $377 per snow-day. for the month of november, the company planned for
activity of 14 snow-days, but the actual level of activity was 19 snow-days. the actual
vehicle operating cost for the month was $9,280. the vehicle operating cost in the
flexible budget for november would be closest to:
a.$9,003
b.$7,118
c.$9,280
d.$9,660
11) financial statements of farnham corporation follow:
cash dividends were $3.
the net cash provided by (used by) operations for the year was:
a.$12
b.$0
c.$17
d.$24
12) the following financial data have been taken from the records of cpz enterprises.
what will happen to the ratios below if cpz enterprises uses cash to pay 50 percent of its
accounts payable?
a.choice a
b.choice b
c.choice c
d.choice d
13) silver company produces a single product. last year, the company’s variable
production costs totaled $7,500 and its fixed manufacturing overhead costs totaled
$4,500. the company produced 3,000 units during the year and sold 2,400 units. there
were no units in the beginning inventory. which of the following statements is true?
a.under variable costing, the units in the ending inventory will be costed at $4 each
b.the net operating income under absorption costing for the year will be $900 lower
than the net operating income under variable costing
c.the ending inventory under variable costing will be $900 lower than the ending
inventory under absorption costing
d.under absorption costing, the units in ending inventory will be costed at $2.50 each
14) demirjian inc. is considering an investment project that would require an initial
investment of $290,000 and that would last for 8 years. the annual cash receipts from
the project would be $189,000 and the annual cash expenses would be $85,000. the
equipment used in the project could be sold at the end of the project for a salvage value
of $29,000. the company’s tax rate is 30%. for tax purposes, the entire initial investment
will be depreciated over 7 years without any reduction for salvage value. the company
uses a discount rate of 13%.
when computing the net present value of the project, what are the annual after-tax cash
receipts?
a.$56,700
b.$104,000
c.$132,300
d.$147,571
15) pachur company, which has only one product, has provided the following data
concerning its most recent month of operations:
the company produces the same number of units every month, although the sales in
units vary from month to month. the company’s variable costs per unit and total fixed
costs have been constant from month to month.
required:
a. what is the unit product cost for the month under variable costing?
b. prepare a contribution format income statement for the month using variable costing.
c. without preparing an income statement, determine the absorption costing net
operating income for the month. (hint: use the reconciliation method.)
16) blomstrom products inc. makes two productsn81w and v55s. product n81w’s selling
price is $20.00 and its unit variable cost is $12.00. product v55s’s selling price is
$108.00 and its unit variable cost is $97.20. the monthly demand is 3,940 units for
product n81w and 1,140 units for v55s. the constrained resource is a particular machine
that is available for 10,400 minutes each month. each unit of product n81w requires 2
minutes on this machine and each unit of product v55s requires 6 minutes on this
machine.
how many units of product v55s should be produced each month?
a.420
b.1,140
c.2,453
d.0
17) rymore company would like to classify the following costs according to their cost
behavior:
which of the following classifications best describes the behavior of cost c?
a.mixed
b.variable
c.fixed
d.none of these
18) menz corporation’s balance sheet and income statement appear below:
cash dividends were $5.
required:
prepare the operating activities section of the statement of cash flows in good form
using the direct method.
19) lynn corporation produces and sells a single product. data concerning that product
appear below:
fixed expenses are $387,000 per month. the company is currently selling 7,000 units per
month.
required:
management is considering using a new component that would increase the unit
variable cost by $3. since the new component would improve the company’s product,
the marketing manager predicts that monthly sales would increase by 300 units. what
should be the overall effect on the company’s monthly net operating income of this
change if fixed expenses are unaffected? show your work!
20) (ignore income taxes in this problem.) furner inc. is considering investing in a
project that would require an initial investment of $480,000. the life of the project
would be 8 years. the annual net cash inflows from the project would be $120,000. the
salvage value of the assets at the end of the project would be $72,000. the company
uses a discount rate of 17%.
required:
compute the net present value of the project.
21) flicker urban diner is a charity supported by donations that provides free meals to
the homeless. the diner’s budget for december was based on 2,400 meals, but the diner
actually served 2,300 meals. the diner’s director has provided the following cost data to
use in the budget: groceries, $2.00 per meal; kitchen operations, $5,100 per month plus
$1.85 per meal; administrative expenses, $2,900 per month plus $0.65 per meal; and
fundraising expenses, $1,000 per month.
required:
prepare a report showing the activity variances for each of the expenses and for total
expenses for december. label each variance as favorable (f) or unfavorable (u).
22) (ignore income taxes in this problem.) the management of an amusement park is
considering purchasing a new ride for $40,000 that would have a useful life of 15 years
and a salvage value of $6,000. the ride would require annual operating costs of $22,000
throughout its useful life. the company’s discount rate is 12%. management is unsure
about how much additional ticket revenue the new ride would generate-particularly
since customers pay a flat fee when they enter the park that entitles them to unlimited
rides. hopefully, the presence of the ride would attract new customers.
required:
how much additional revenue would the ride have to generate per year to make it an
attractive investment?
23) in october, one of the processing departments at gascon corporation had beginning
work in process inventory of $10,000 and ending work in process inventory of $16,000.
during the month, $100,000 of costs were added to production and the cost of units
transferred out from the department was $94,000.the company uses the fifo method in
its process costing system.
required:
construct a cost reconciliation report for the department for the month of october.
24) goetter corporation’s comparative balance sheet appears below:
the company’s net income (loss) for the year was $5,000 and its cash dividends were
$2,000.
required:
classify the change for the year in each balance sheet account as a source, use, or
neither a source nor a use. (do this only for the individual accounts-not for totals or
subtotals.)
25) alto clinic uses patient-visits as its measure of activity. the clinic has provided the
following report:
required:
prepare the clinic’s flexible budget performance report for june. label each variance as
favorable (f) or unfavorable (u).
26) yerkes corporation makes a product that sells for $110 per unit. the product’s current
sales are 35,900 units and its break-even sales are 26,566 units.
required:
compute the margin of safety in both dollars and as a percentage of sales.
27) plikerd corporation has provided the following data for august:
required:
compute the variable overhead rate variances for lubricants and for supplies for august.
indicate whether each of the variances is favorable (f) or unfavorable (u). show your
work!