1) Keyton Corporation’s net operating income in Year 2 was $43,714, net income before
taxes was $30,714, and the net income was $21,500. Total common stock was $200,000
at the end of both Year 2 and Year 1. The par value of common stock is $4 per share.
The company’s total stockholders’ equity at the end of Year 2 amounted to $1,148,000
and at the end of Year 1 to $1,130,000. The company declared and paid $3,500
dividends on common stock in Year 2. The market price per share was $8.43 at the end
of Year 2. The company’s dividend payout ratio for Year 2 is closest to:
A.0.8%
B.1.8%
C.16.3%
D.11.4%
2) Bera Corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products:
Data for one of the company’s products follow:
How much overhead cost would be assigned to Product Q79P using the activity-based
costing system?
A.$7,119.92
B.$43,659.54
C.$4,770.99
D.$125.82
3) The company’s current ratio at the end of Year 2 is closest to:
A.0.83
B.1.96
C.0.45
D.0.37
4) Given the cost formula Y = $18,000 + $6X, total cost at an activity level of 9,000
units would be:
A) $72,000
B) $18,000
C) $36,000
D) $54,000
5) Comparative balance sheets and the income statements for Ellis Corporation are
presented below:
The following additional information is available for the year:
* During the year, the company sold long-term investments for $35,500 that had been
purchased for $38,000.
* The company did not sell any property, plant, and equipment during the year or
repurchase any of its own common stock.
* All sales were on credit.
* The company paid a cash dividend of $25,000.
* The company paid cash to retire $15,000 of bonds payable.
Required:
a. Using the indirect method, determine the net cash provided by operating activities.
b. Using the direct method, determine the net cash provided by operating activities.
c. Using the net cash provided by operating activities amount from either part a or b,
prepare a statement of cash flows.
6) The net present value of the entire project is closest to:
A.$(2,498)
B.$34,420
C.$(13,938)
D.$119,000
Depreciation expense = (Original cost – Salvage value) / Useful life
= ($280,000 – $0) / 4 years = $70,000 per year
Trammel Corporation is considering a capital budgeting project that would require
investing $280,000 in equipment with an expected life of 4 years and zero salvage
value. Annual incremental sales would be $650,000 and annual incremental cash
operating expenses would be $450,000. The project would also require a one-time
renovation cost of $100,000 in year 3. The company’s income tax rate is 30% and its
after-tax discount rate is 7%. The company uses straight-line depreciation. Assume cash
flows occur at the end of the year except for the initial investments. The company takes
income taxes into account in its capital budgeting.
7) Yacavone Corporation has two operating divisions–a Consumer Division and a
Commercial Division. The company’s Customer Service Department provides services
to both divisions. The variable costs of the Customer Service Department are budgeted
at $43 per order. The Customer Service Department’s fixed costs are budgeted at
$274,400 for the year. The fixed costs of the Customer Service Department are
determined based on the peak-period orders.
At the end of the year, actual Customer Service Department variable costs totaled
$216,090 and fixed costs totaled $292,890. The Consumer Division had a total of 1,310
orders and the Commercial Division had a total of 3,590 orders for the year. For
performance evaluation purposes, how much actual Customer Service Department cost
should NOT be charged to the operating divisions at the end of the year?
A.$18,490
B.$5,390
C.$23,880
D.$0
8) Spacer Corporation has two service departments and two operating departments.
Budgeted costs and budgeted activity in the various departments for last year are shown
below:
Service department costs are allocated to operating departments with the costs of
Custodial Services allocated on the basis of square feet of space occupied and the costs
of the Cafeteria on the basis of number of employees. The departmental costs for the
cutting and assembly departments are overhead costs. Predetermined overhead rates in
the Cutting and Assembly departments are based on machine-hours.
Assume that the company uses the step-down method of allocation with Custodial
Services allocated first. The amount of Custodial Services cost allocated to the
Assembly Department would be:
A.$0
B.$28,000
C.$24,000
D.$25,200
9) The same constrained resource is used by four different products at Rodrigez
Corporation. Data concerning those products appear below:
The company does not have enough of the constrained resource to satisfy for demand of
all four products. From the standpoint of the entire company, if it is a choice between
sales of one unit of one product versus another, which product should the salespersons
emphasize?
A.Z300
B.Z400
C.Z200
D.Z100
10) Kaze Corporation’s cash and cash equivalents consist of cash and marketable
securities. Last year the company’s cash account increased by $25,000 and its
marketable securities account decreased by $15,000. Cash provided by operating
activities was $38,000. Net cash provided by investing activities was $9,000. Based on
this information, the net cash flow from financing activities on the statement of cash
flows was:
A.a net $37,000 decrease.
B.a net $37,000 increase.
C.a net $47,000 decrease.
D.a net $47,000 increase.
11) The markup percentage on absorption cost is closest to:
A.25%
B.10%
C.15%
D.41%
12) Crow Corporation produces a single product and has the following cost structure:
The variable costing unit product cost is:
A.$190 per unit
B.$95 per unit
C.$102 per unit
D.$96 per unit
13) FarWest Industrial, Inc. has a Maintenance Department that provides services to the
company’s two operating departments. The variable costs of the Maintenance
Department are charged on the basis of the number of maintenance hours logged in
each department. Last year, budgeted variable maintenance costs were $5.00 per
maintenance hour and actual variable maintenance costs were $5.75 per maintenance
hour.
The budgeted and actual maintenance hours for each operating department for last year
appear below:
Required:
a. Compute the amount of variable Maintenance Department cost that should have been
charged to each operating department at the end of the year for performance evaluation
purposes.
b. Compute the amount of actual variable Maintenance Department cost that should not
have been charged to the operating departments at the end of the year for performance
evaluation purposes.
14) The company’s operating cycle for Year 2 is closest to:
A.71.2 days
B.93.5 days
C.18.6 days
D.41.0 days
15) The company has received a special, one-time-only order for 500 units of
component D53. There would be no variable selling expense on this special order and
the total fixed manufacturing overhead and fixed selling and administrative expenses of
the company would not be affected by the order. Assuming that Dockwiller has excess
capacity and can fill the order without cutting back on the production of any product,
what is the minimum price per unit on the special order below which the company
should not go?
A) $67 per unit
B) $30 per unit
C) $150 per unit
D) $47 per unit
16) Zelenka Clinic uses client-visits as its measure of activity. During June, the clinic
budgeted for 2,700 client-visits, but its actual level of activity was 2,710 client-visits.
The clinic has provided the following data concerning the formulas to be used in its
budgeting for June:
The net operating income in the planning budget for June would be closest to:
A.$18,384
B.$16,466
C.$16,220
D.$18,248
17) Ort Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of Resource Consumption across Activity Cost Pools:
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
How much indirect factory wages and factory equipment depreciation cost would NOT
be assigned to products using the activity-based costing system?
A.$56,000
B.$100,000
C.$360,000
D.$0