1) during the current year, outlytech corp. expected to sell 24,000 telephone switches.
fixed costs for the year were expected to be $12,144,000, the unit sales price was
budgeted at $3,200, and unit variable costs were budgeted at $1,440.
outlytech’s margin of safety ratio (mos%) is:
a.71.25%
b.87.00%
c.70.25%
d.92.50%
e.76.15%
2) the costs of operating a regional warehouse is an example of a:
a.customer unit-level cost
b.customer batch-level cost
c.customer-sustaining cost
d.distribution-channel cost
e.sales-level cost
3) the process of planning business actions in the near future and expressing them as
formal plans of action is called:
a.budgeting
b.goal congruence
c.budgetary slack
d.resource consumption accounting
e.financial accounting
4) which one of the following is not usually included as a perspective of the balanced
scorecard?
a.financial performance
b.tax reporting
c.learning and growth
d.customer satisfaction
e.internal business processes
5) universal automotive group is a maker of engines for high performance cars and uses
a process costing system. the following information pertains to the final department of
manufacturing for universal’s most popular engine, the “atomic 8”.
universal automotive group calculates separate costs of spoilage by computing both
normal and abnormal spoiled units. normal spoilage costs are reallocated to good units
and abnormal spoilage costs are charged as a loss. the units of the atomic 8 that are
spoiled are the result of defects not discovered before inspection of finished units. using
the weighted-average method, answer the following question:
what are the total conversion costs of abnormal spoilage?
a.$60,518
b.$53,454
c.$64,908
d.$58,314
6) national inc. manufactures two models of cmd that can be used as cell phones, mpx,
and digital camcorders.
national uses a volume-based costing system to apply factory overhead based on direct
labor dollars. the unit prime costs of each product were as follows:
national’s controller had been researching activity-based costing and decided to switch
to it. a special study determined national’s two products have the following budgeted
activities:
using activity-based costing, applied miscellaneous overhead for the highf model per
unit is
(rounded to the nearest cent):
a.$6.13
b.$11.86
c.$16.28
d.$32.36
e.$66.73
7) roadmaster equipment is an up-scale, higher-priced, specialty road construction
equipment maker based in irvine, california. the management accountant for roadmaster
compiled information for various levels of output in units:
required:
rounding all calculations to the nearest dollar, fill in the blanks with the correct figures.
8) stoltenberg co. had the following information for the month of june:
beginning work-in-process inventory is 30 percent complete as to conversion. ending
work-in-process inventory is 50 percent complete as to conversion. materials are added
at the end of the process.
the equivalent units for materials under the weighted-average method are calculated to
be:
a.12,000
b.10,000
c.14,000
d.16,000
e.18,000
9) burmer co. has accumulated data to use in preparing its annual profit plan for the
upcoming year. the cost behavior pattern of the maintenance costs must be determined.
data regarding the machine hours and maintenance costs for the last year and the results
of the regression analysis are as follows:
a staff assistant has run regression analyses on the data and obtained the following
output using excel:
regression analysis
y (dependent) variable: maintenance cost
x (independent) variable: maintenance hours
a key statistic that indicates reliability of the regression is:
a.12
b.47.0630
c.0.9964
d.783.338
e.6.777
10) the act of encouraging non-value-adding actions on the part of management in order
to improve indicated performance is referred to as:
a.goal congruency
b.gaming the performance indicator
c.the use of fixed-performance contract
d.linear optimization analysis
e.the use of a relative-performance contract
11) the following costs are incurred by the oakland company, a manufacturer of
furniture.
1) wood and fabric used in furniture
2) depreciation on machinery
3) property taxes on the factory
4) labor costs to manufacture the furniture
5) electricity cost to operate the machinery
6) factory rent
7) production supervisor’s salary
8) sandpaper and other supplies
9) fire insurance on factory
10) commissions paid to salespersons
required
classify each cost as either variable or fixed.
12) based in minneapolis, minnesota, the hubert memorial foundation has $300 million
in investments and contributes approximately 80 percent of the average annual return of
$25 million to worthy causes. individuals and groups requesting grants of $100,000 or
more must make an in-person presentation of their request. these presentations
generally involve three to five individuals and take an average of two hours each. the
executive director of the hubert foundation is concerned with the cost of resources used
to schedule and accommodate the 500 to 600 group presentations each year. she has
asked you for suggestions about what kind of cost data to gather, and ways to classify
the data to help her understand cause/effect relationships between costs and results.
required: write a brief memo to the executive director giving her some basic
information on cost classification and behavior.
13) plant overhead for abc corp in $150 million per year, a portion of which (20%) is
attributable to inspection costs which are charged to products on the basis the number of
parts in the products. the plant produces 500,000 units per year, and on the average,
each product has 20 parts.
required: what is the average inspection cost in a product? what is the inspection cost
for a product with 50 parts?
14) lovely pet store has budgeted cost of goods sold for may of $6,000 for flea collars.
management also wants to have $300 in inventory at the end of the month to prepare for
the summer season. beginning inventory in may was $200.
required: what dollar amount of flea collars should be purchased to meet the above
objectives?
15) a computer virus destroyed some of the accounting records for hampton furniture
company for the periods of 2011-2013 . the following information was salvaged from
the computer system.
required:
determine the correct amounts for a through p.
16) grey company is considering replacing its existing cutting machine with a new
machine that, according to the manufacturer, is more efficient in terms of energy
consumptiona variable cost of production. in this regard, it would like to do some
financial planning, including “what-if” analysis. budgeted information regarding the
two machines is as follows:
required:
1> determine the sales volume at which the costs are the same for both machines.
2> what amount of sales, in dollars, for the new machine would produce a 10% profit
margin (i.e. ratio of operating profit to sales = 10%)?
17) a business develops a budget for many reasons beyond wanting to know what future
profits will be. comment on the role of a firm’s strategic goals in both the master budget
and the capital budget.