1) the management of smoots corporation would like for you to analyze their repair
costs, which are listed below:
management believes that repair cost is a mixed cost that depends on the number of
machine-hours. using the least-squares regression method, the estimates of the variable
and fixed components of repair cost would be closest to:
a.$64 per machine-hour plus $34,603 per month
b.$2.09 per machine-hour plus $19,018 per month
c.$2.79 per machine-hour plus $13,787 per month
d.$2.00 per machine-hour plus $19,649 per month
2) granite company uses a job-order costing system. the company applies
manufacturing overhead to jobs using a predetermined overhead rate based on direct
labor-hours. last year, manufacturing overhead and direct labor-hours were estimated at
$80,000 and 16,000 hours respectively, for the year. in june, job #315 was completed.
materials costs on the job totaled $1,500 and labor costs totaled $2,400 at $6 per hour.
at the end of the year, it was determined that the company worked 15,000 direct
labor-hours for the year, and incurred $78,000 in actual manufacturing overhead costs.
required:
a. determine the predetermined overhead rate for the year.
b. determine the amount of overhead charged to jobs during the year.
c. determine the amount of underapplied or overapplied overhead for the year.
d. assuming that 100 units were completed, determine the unit cost that would appear
on the job cost sheet for job #315.
3) the alpha company produces toys for national distribution. standards for a particular
toy are:
materials: 12 ounces per unit at 56 per ounce.
labor: 2 hours per unit at $2.75 per hour.
during the month of december, the company produced 1,000 units. information for the
month follows:
materials: 14,000 ounces were purchased and used at a total cost of $7,140.
labor: 2,500 hours worked at a total cost of $8,000.
the labor rate variance is:
a.$2,500 f
b.$1,125 f
c.$1,125 u
d.$2,500 u
4) the accounts receivable turnover for year 2 is closest to:
a.6.14
b.5.74
c.0.88
d.1.14
5) the debt-to-equity ratio at the end of year 2 is closest to:
a.0.67
b.0.61
c.0.34
d.0.25
6) which one of the following costs should not be considered an indirect cost of serving
a particular customer at a dairy queen fast food outlet?
a.the cost of the hamburger patty in the burger they ordered
b.the wages of the employee who takes the customer’s order
c.the cost of heating and lighting the kitchen
d.the salary of the outlet’s manager
7) llano corporation has four products that use the same constrained resource. data
concerning those products appear below:
the company does not have enough of the constrained resource to satisfy for demand of
all four products.
required:
a. if salespersons are paid commissions that are a set percentage of sales, which product
would they prefer to sell? in other words, if it is a choice between selling one unit of
one product and one unit of another, which product would they prefer to sell?
b. 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?
8) (ignore income taxes in this problem.) the management of wiersema corporation is
investigating purchasing equipment that would increase sales revenues by $257,000 per
year and cash operating expenses by $103,000 per year. the equipment would cost
$430,000 and have a 5 year life with no salvage value. the simple rate of return on the
investment is closest to:
a.15.8%
b.20.0%
c.26.5%
d.35.8%
9) the following data pertains to activity and the cost of electricity for two recent
months:
the best estimate of the total monthly fixed electrical cost is:
a.$300
b.$1,200
c.$1,500
d.$1,050
10) walsh company produces a single product. last year, the company manufactured
25,000 units and sold 22,000 units. production costs were as follows:
sales totaled $440,000, variable selling and administrative expenses were $110,000, and
fixed selling and administrative expenses were $45,000. there was no beginning
inventory. assume that direct labor is a variable cost.
the net operating income under absorption costing would be:
a.$9,000
b.$12,000
c.$2,000
d.$21,000
11) the optimal markup on variable cost:
a.increases as unit sales become more sensitive to price
b.decreases as unit sales become more sensitive to price
c.is not affected by the price sensitivity of a product’s sales volume
d.is equal to [ed/(1 + ed)] + 1, where ed is the price elasticity of demand
12) the inventory turnover for year 2 is closest to:
a.0.87
b.6.77
c.6.29
d.1.15
13) feauto manufacturing corporation has a traditional costing system in which it
applies manufacturing overhead to its products using a predetermined overhead rate
based on direct labor-hours (dlhs). the company has two products, i63e and e76i, about
which it has provided the following data:
the company’s estimated total manufacturing overhead for the year is $2,063,250 and
the company’s estimated total direct labor-hours for the year is 45,000.
the company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. data for this proposed activity-based costing
system appear below:
look manufacturing corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on
direct labor-hours (dlhs). the company has two products, n06d and m09k, about which it
has provided the following data:
the company’s estimated total manufacturing overhead for the year is $2,532,200 and
the company’s estimated total direct labor-hours for the year is 44,000.
the company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. data for this proposed activity-based costing
system appear below:
the manufacturing overhead that would be applied to a unit of product i63e under the
company’s traditional costing system is closest to:
a.$12.80
b.$39.35
c.$76.03
d.$36.68
14) hinsey corporation produces and sells a single product. data concerning the product
appear below:
fixed expenses are $300,000 per month. the company is currently selling 4,000 units per
month. consider each of the following questions independently.
this question is to be considered independently of all other questions relating to hinsey
corporation. refer to the original data when answering this question.
management is considering using a new component that would increase the unit
variable cost by $11. since the new component would increase the features of the
company’s product, the marketing manager predicts that monthly sales would increase
by 500 units. what should be the overall effect on the company’s monthly net operating
income of this change?
a.decrease of $38,500
b.increase of $5,500
c.increase of $38,500
d.decrease of $5,500