1) What is the promotion of products and services known as?
A) Customer service
B) Marketing
C) Distribution
D) Design
2) A product is sold at $60.00 per unit, the variable expense per unit is $30, and total
fixed expenses are $200,000, what are the breakeven sales in dollars?
A) $3,333
B) $100,000
C) $133,333
D) $400,000
3) Senseman Company has three potential projects from which to choose. Selected
information on each of the three projects follows:
Using the profitability index, rank the projects from most profitable to least profitable.
A) A, B, C
B) C, B, A
C) B, A, C
D) B, C, A
4) A company uses the indirect method to prepare the statement of cash flows. It
presents the following amounts on its financial statements.
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?
A) The increase of $15,000 will be subtracted from sales revenue
B) The increase of $15,000 will be added to net income
C) The increase of $15,000 will be subtracted from net income
D) The increase of $15,000 will be added to sales revenue
5) Sunnyside Orchards, a juice manufacturer, uses a process that adds flavoring at the
beginning of the process and vitamins and minerals 65% of the way through the
process. Conversion costs are evenly distributed. Assume there are no beginning
inventories. The company started making 14,000 gallons of the drink, and the 1,500
gallons left in ending WIP were 50% of the way through the process.
Costs incurred during the period were:
The cost assigned to ending work in process would be closest to
A) $2,625
B) $1,725
C) $1,425
D) $1,125
6) A company uses the direct method to prepare the statement of cash flows. It presents
the following amounts on its financial statements.
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to inventory?
A) The decrease of $18,000 will be subtracted from net income
B) The decrease of $18,000 will be added to net income
C) The decrease of $18,000 will be subtracted from cost of goods sold to determine
payments to suppliers
D) The decrease of $18,000 will be added to cost of goods sold to determine payments
to suppliers
7) Taylor Company reported the following information for the current year:
What would a vertical analysis report with respect to the relationship between current
year net sales revenue and COGS?
A) COGS was 60.00% of net sales revenue
B) A 8.20% decrease from prior to current year
C) An increase of $19,680 from prior to current year
D) An increase of $460,320 from prior to current year
8) Fancy Furniture has variable expenses of 40% of sales and monthly fixed expenses
of $240,000. The monthly target operating income is $60,000. What is the monthly
margin of safety as a percentage of target sales in dollars?
A) 180.00%
B) 25.00%
C) 20.00%
D) 60.00%
9) Telecom uses activity-based costing to allocate all manufacturing conversion costs.
Telecom produces cellular telephones; each phone has $40.00 of direct materials,
includes 30 parts and requires 3 hours of machine time. Additional information follows:
What is the cost of machining per phone?
A) $42.00
B) $30.00
C) $6.00
D) $15.00
10) IFRS stands for
A) Important Foreign Registering Systems
B) International and Foreign Registering Standards
C) International and Foreign Reporting Systems
D) International Financial Reporting Standards
11) Jiffy Lube, an automotive maintenance company, is primarily what type of
company?
A) Manufacturer
B) Retailer
C) Wholesaler
D) Service
12) Sherwin Chemicals produces commercial strength cleansing supplies. Two of its
main products are window cleanser that uses ammonia, and floor cleanser that uses
bleach. Information for the most recent period follows:
What is the direct materials flexible budget variance for ammonia?
A) $1,125 unfavorable
B) $1,875 unfavorable
C) $1,125 favorable
D) $1,875 favorable
13) Spruce Company uses a job costing system. Spruce Company’s schedule of cost of
goods manufactured showed the following amounts for the month ended August 31 .
Manufacturing overhead cost is allocated at the rate of $13 per direct labor hour.
What is the amount of allocated manufacturing overhead costs for August?
A) $30,875
B) $76,000
C) $124,000
D) $42,000
14) The Settler’s Chuck Wagon sells tickets for dinner and a show for $50 each. The
cost of providing dinner is $23 per ticket and the fixed cost of operating the theater is
$115,000 per month. The company can accommodate 13,500 patrons each month. What
is the contribution margin per patron?
A) $1.85
B) $ 0.54
C) $27.00
D) $23.00
15) The direct labor flexible budget variance can be divided into two variances:
A) rate variance and price variance
B) price variance and usage variance
C) rate variance and efficiency variance
D) price variance and efficiency variance
16) Which type of company has three types of inventory?
A) A manufacturing company
B) A merchandising company
C) A service company
D) All of these companies
17) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to current assets?
A) Inventory turnover of 9.17 times
B) Current ratio of 1.06
C) A 26.00% increase in current assets
D) Current assets as 40.60% of total assets
18) Which of the following is not a way in which management can use job cost
information?
A) Assessing and comparing the profitability of each product type
B) Using the cost information in determining the bid price for custom orders
C) Preparing the financial statements
D) Determining the balance in raw materials inventory
19) Solid Oak Bureau Company uses job costing. Solid Oak Bureau Company has two
departments, Trimming and Finishing. Manufacturing overhead is allocated based on
direct labor cost in the Trimming Department and direct labor hours in the Finishing
Department. The following additional information is available:
Actual data for completed Job No. 650 is as follows:
What is the predetermined manufacturing overhead rate for the Trimming Department?
A) 77% of direct labor cost
B) 107% of direct labor cost
C) 130% of direct labor cost
D) 100% of direct labor cost
20) Lakewood Jet Skis has budgeted sales for June and July at $420,000 and $480,000,
respectively. Sales are 75% credit, of which 40% is collected in the month of sale and
60% is collected in the following month. What is the accounts receivable balance on
July 31?
A) $189,000
B) $288,000
C) $216,000
D) $360,000
21) The balance sheet of a service company has
A) raw materials inventory
B) little or no inventory
C) three categories of inventory
D) two categories of inventory
22) In the equation y = $11.75x + $550,
A) $550 are the total step costs
B) $550 are the total overhead costs
C) $550 are the total variable costs
D) $550 are the total fixed costs
23) Porches, Inc., sells lawn furniture. Selected financial information for the most
recent year follows:
Beginning merchandise inventory on January 1 was $33,000.
Ending merchandise inventory on December 31 was $35,000.
Purchases during the year were $92,000.
Selling and administrative expenses were $75,000.
Sales for year were $262,000.
What was operating income for the year?
A) $90,000
B) $97,000
C) $95,000
D) $93,000
24) If the selling price per unit is $25.00, the variable expense per unit is $6.25, and the
breakeven sales in dollars is $465,200, what are total fixed expenses?
A) $18,608
B) $ 992
C) $348,900
D) $1,395,600
25) The formula for computing earnings per share of common stock is
A) (net income + interest expense) / average total assets
B) net income/net sales
C) (net income – preferred dividends) / average common stockholders’ equity
D) (net income – preferred dividends) / number of shares of outstanding common stock
26) An internal request for raw materials calls for a ________ to be completed.
A) materials requisition
B) bill of materials
C) purchase order
D) labor time record
27) How do total variable costs behave?
A) They decrease as production decreases
B) They remain the same throughout production levels within the relevant range
C) They decrease as production increases
D) They increase as production decreases
28) Indicate whether each item below is a characteristic of a price-taker or a
price-setter. Use PT for price-taker and PS for price-setter.
a)Cost-plus pricing
b)Product lacks uniqueness
c)Less competition
d)Target pricing
e)Heavy competition
29) Total fixed costs for Green Planes Inc. are $120,000. Total costs, including both
fixed and variable, are $600,000 if 150,000 units are produced. The total variable costs
at a level of 220,000 units would be
A) $409,091
B) $176,000
C) $880,000
D) $704,000
30) Which of the following describes the way in which total fixed costs behave?
A) They will decrease as production increases
B) They will decrease as production decreases
C) They will remain the same throughout production levels within the relevant range
D) They will increase as production decreases
31) The Hummel Corporation reported the following income statement and balance
sheet amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s earnings per share for the current year?
A) $6.50
B) $2.00
C) $3.50
D) $12.50
32) Manufacturing overhead is overallocated if the amount
A) allocated during the period is greater than the actual amount incurred
B) estimated for the period is less than the amount allocated
C) estimated for the period is greater than the amount allocated
D) allocated during the period is less than the actual amount incurred
33) The following information for the past year for the Blaine Corporation has been
provided:
During the year, the company produced and sold 30,000 units of product at a selling
price of $15.00 per unit. There was no beginning inventory of product at the beginning
of the year.
What is the contribution margin for the year?
A) $ 93,000
B) $450,000
C) $262,000
D) $281,000
34) Which of the following does ABC take into account?
A) The types of manufacturing activities used by the product
B) The extent to which the manufacturing activities are used by the product
C) Both A and B
D) Neither A nor B
35) In the equation y = $11.75x + $550, “y” represents
A) total costs
B) total fixed costs
C) variable costs/unit
D) none of the above
36) Gilmore Corporation is investigating the possibility of adopting a lean thinking
philosophy in its manufacturing facilities. The plant manager has done a cost-benefit
analysis and has found that the costs of the lean production program exceed the benefits
by $115,000. You analyze the situation and make some adjustments to the cost
estimates. After doing your analysis, you find that costs still outweigh benefits by less
than 5%. Which might be a sound course of action?
A) Consider dropping the plan
B) Look for ways to lessen costs
C) Re-evaluate the value of benefits
D) All of the above should be considered
37) CPA firms are permitted to provide which of the following services to audit clients?
A) Tax preparation
B) Information systems design
C) Consulting
D) Bookkeeping
38) Which of the following is a reason an organization would pursue sustainability?
A) To improve its competitive position
B) To save money
C) To appease shareholders
D) All of the above