1) Manico Corporation produces three products — X, Y, & Z — with the following
characteristics:
The company has only 2,000 machine-hours available each month. If demand exceeds
the company’s capacity, in what sequence should orders be filled if the company wants
to maximize its total contribution margin?
A) orders for Z first, X second, and Y third
B) orders for X first, Z second, and Y third
C) orders for Y first, X second, and Z third
D) orders for Z first and no orders for X or Y
2) Qualls Corporation makes a product that has the following costs:
The company uses the absorption costing approach to cost-plus pricing as described in
the text. The pricing calculations are based on budgeted production and sales of 48,000
units per year.
The company has invested $360,000 in this product and expects a return on investment
of 15%.
Required:
a. Compute the markup on absorption cost.
b. Compute the selling price of the product using the absorption costing approach.
c. Assume that every 10% increase in price leads to a 13% decrease in quantity sold.
Assuming no change in cost structure and that direct labor is a variable cost, compute
the profit-maximizing price.
3) Graybeal Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in March.
The materials price variance is recognized when materials are purchased. Variable
overhead is applied on the basis of direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.
4) Miao Clinic uses client-visits as its measure of activity. During July, the clinic
budgeted for 3,000 client-visits, but its actual level of activity was 2,980 client-visits.
The clinic has provided the following data concerning the formulas used in its
budgeting and its actual results for July:
Data used in budgeting:
Actual results for July:
The activity variance for administrative expenses in July would be closest to:
A.$8 U
B.$308 F
C.$308 U
D.$8 F
5) The accounts receivable turnover for Year 2 is closest to:
A.6.62
B.1.10
C.6.32
D.0.91
6) The company’s book value per share at the end of Year 2 is closest to:
A.$0.38 per share
B.$8.18 per share
C.$18.08 per share
D.$13.93 per share
7) Stitt Corporation manufactures and sells a single product. The company uses units as
the measure of activity in its budgets and performance reports. During November, the
company budgeted for 5,900 units, but its actual level of activity was 5,880 units. The
company has provided the following data concerning the formulas used in its budgeting
and its actual results for November:
Data used in budgeting:
Actual results for November:
The spending variance for manufacturing overhead in November would be closest to:
A.$1,760 U
B.$1,736 F
C.$1,736 U
D.$1,760 F
8) The total cash flow net of income taxes in year 2 is:
A.$92,000
B.$28,000
C.$120,000
D.$80,000
9) How much of the unit product cost of $59.90 is relevant in the decision of whether to
make or buy the part?
A.$38.00 per unit
B.$59.90 per unit
C.$35.20 per unit
D.$22.70 per unit
10) Juenemann 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 December, the kennel
budgeted for 3,800 tenant-days, but its actual level of activity was 3,770 tenant-days.
The kennel has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Actual results for December:
The spending variance for facility expenses in December would be closest to:
A.$1,040 U
B.$1,040 F
C.$1,160 F
D.$1,160 U
11) Hejl 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 $210 per
month plus $86 per job plus $15 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 March to be 23 jobs and 222 meals, but the actual activity was 28 jobs and
217 meals. The actual cost for catering supplies in March was $5,830. The spending
variance for catering supplies in March would be closest to:
A.$312 F
B.$312 U
C.$43 F
D.$43 U