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1) Crooks Corporation processes sugar beets in batches that it purchases from farmers
for $57 a batch. A batch of sugar beets costs $12 to crush in the company's plant. Two
intermediate products, beet fiber and beet juice, emerge from the crushing process. The
beet fiber can be sold as is for $28 or processed further for $17 to make the end product
industrial fiber that is sold for $67. The beet juice can be sold as is for $39 or processed
further for $24 to make the end product refined sugar that is sold for $54. Which of the
intermediate products should be processed further?
A) beet fiber should be processed into industrial fiber; beet juice should be processed
into refined sugar
B) beet fiber should be processed into industrial fiber; beet juice should NOT be
processed into refined sugar
C) beet fiber should NOT be processed into industrial fiber; beet juice should be
processed into refined sugar
D) beet fiber should NOT be processed into industrial fiber; beet juice should NOT be
processed into refined sugar
2) Stewart Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in August.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
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.
3) When the actual price to purchase a raw material on account is less than its standard
price, the journal entry would include:
A.Credit to Raw Materials; Credit to Materials Price Variance
B.Credit to Accounts Payable; Credit to Materials Price Variance
C.Credit to Raw Materials; Debit to Materials Price Variance
D.Credit to Accounts Payable; Debit to Materials Price Variance
4) Sablan Inc. maintains a call center to take orders, answer questions, and handle
complaints. The costs of the call center for a number of recent months are listed below:
Management believes that the cost of the call center is a mixed cost that depends on the
number of calls taken.
Required:
Estimate the variable cost per call and fixed cost per month using the least-squares
regression method.
5) Younger Corporation reports that at an activity level of 8,700 units, its total variable
cost is $653,109 and its total fixed cost is $658,416.
Required:
For the activity level of 8,800 units, compute: (a) the total variable cost; (b) the total
fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed
cost per unit; and (f) the average total cost per unit. Assume that this activity level is
within the relevant range.
6) Wales 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 2,700 tenant-days, but its actual level of activity was 2,730 tenant-days. The kennel
has provided the following data concerning the formulas to be used in its budgeting:
The administrative expenses in the planning budget for February would be closest to:
A.$6,639
B.$6,713
C.$6,970
D.$6,973
7) The absorption costing unit product cost is:
A.$59
B.$86
C.$55
D.$75
8) (Ignore income taxes in this problem) The management of Urbine Corporation is
considering the purchase of a machine that would cost $350,000, would last for 6 years,
and would have no salvage value. The machine would reduce labor and other costs by
$79,000 per year. The company requires a minimum pretax return of 14% on all
investment projects. The net present value of the proposed project is closest to:
A.$(42,769)
B.$124,000
C.$(93,877)
D.$56,493
9) Gilpatric Corporation produces and sells two products. In the most recent month,
Product Q71M had sales of $28,000 and variable expenses of $7,840. Product V04P
had sales of $49,000 and variable expenses of $27,580. The fixed expenses of the entire
company were $34,630.
If the sales mix were to shift toward Product Q71M with total sales remaining constant,
the overall break-even point for the entire company:
A.would increase.
B.could increase or decrease.
C.would not change.
D.would decrease.
10) Hache 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.$16.66
B.$15.31
C.$17.53
D.$19.09
11) Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:
A.0.50
B.0.36
C.0.19
D.0.17
12) If the F-27 product is added next year, the change in operating income should be:
A.$30,000 increase
B.$5,000 decrease
C.$23,000 increase
D.$15,000 increase
13) The company's earnings per share for Year 2 is closest to:
A.$0.31 per share
B.$0.47 per share
C.$0.79 per share
D.$3.88 per share
