1) the management of cerruto corporation has provided the following data concerning
its two products:
the constrained resource is a particular machine that is available for 9,600 minutes each
month.
the company is considering launching a new product that would have a variable cost of
$117.00 per unit. it would require 6 minutes of the constrained resource. the absolute
minimum acceptable selling price for the new product should be:
a.$126.30
b.$172.80
c.$117.00
d.$196.20
2) sheela dairy corporation buys unprocessed cows’ milk from local farmers. at the
dairy, this unprocessed milk is broken down into cream and low-fat milk. the cream can
be sold at this point or can be further processed into butter. which of the following
would be relevant in the decision to further process the cream into butter?
a.the amount paid to the farmers to purchase the unprocessed milk
b.the cost of breaking down the unprocessed milk into cream and low-fat milk
c.the portion of corporate fixed expenses that are currently being allocated to cream
d.none of these
3) (ignore income taxes in this problem.) white company’s required rate of return on
capital budgeting projects is 12%. the company is considering an investment
opportunity which would yield a cash flow of $10,000 in five years. what is the most
that the company should be willing to invest in this project?
a.$36,050
b.$2,774
c.$17,637
d.$5,670
4) baylor inc., which produces a single product, has provided the following data for its
most recent month of operations:
there were no beginning or ending inventories. the variable costing unit product cost
was:
a.$91
b.$67
c.$69
d.$61
5) lian corporation’s standard wage rate is $12.10 per direct labor-hour (dlh) and
according to the standards, each unit of output requires 7.1 dlhs. in june, 4,500 units
were produced, the actual wage rate was $11.90 per dlh, and the actual hours were
35,930 dlhs.
the labor rate variance for june would be recorded as a:
a.credit of $6,390
b.credit of $7,186
c.debit of $7,186
d.debit of $6,390
6) the cfo of stoffer corporation has provided the following data for october. the
beginning balance in the raw materials inventory account was $39,000. during the
month, the company made raw materials purchases amounting to $68,000. at the end of
the month, the balance in the raw materials inventory account was $28,000. direct labor
cost was $29,000 and manufacturing overhead was $78,000. the beginning balance in
the work in process account was $11,000 and the ending balance was $13,000. the
beginning balance in the finished goods account was $37,000 and the ending balance
was $47,000. sales totaled $240,000. selling expense was $21,000 and administrative
expense was $27,000.
the cost of goods sold for october was:
a.$194,000
b.$230,000
c.$128,000
d.$174,000
7) brittman corporation makes three products that use the current constraint-a particular
type of machine. data concerning those products appear below:
rank the products in order of their current profitability from most profitable to least
profitable. in other words, rank the products in the order in which they should be
emphasized.
a.ip,yd,ni
b.yd,ni,ip
c.yd,ip,ni
d.ni,yd,ip
8) tosta 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 may, the kennel budgeted for
2,100 tenant-days, but its actual level of activity was 2,050 tenant-days. the kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for may:
the net operating income in the planning budget for may would be closest to:
a.$9,140
b.$11,626
c.$12,200
d.$8,420
9) in august direct labor was 60% of conversion cost. if the manufacturing overhead for
the month was $54,000 and the direct materials cost was $34,000, the direct labor cost
was:
a.$36,000
b.$22,667
c.$51,000
d.$81,000
10) guasson corporation uses the weighted-average method in its process costing
system. this month, the beginning inventory in the first processing department consisted
of 500 units. the costs and percentage completion of these units in beginning inventory
were:
a total of 6,400 units were started and 5,800 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 50% 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 materials for the month in the first processing
department?
a.935
b.6,735
c.6,900
d.5,800