1) the management of cius corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the
estimated amount of activity for the year. the company’s controller has provided an
example to illustrate how this new system would work. in this example, the allocation
base is machine-hours and the estimated amount of the allocation base for the upcoming
year is 84,000 machine-hours. in addition, capacity is 91,000 machine-hours and the
actual activity for the year is 82,200 machine-hours. all of the manufacturing overhead
is fixed and is $5,962,320 per year. for simplicity, it is assumed that this is the estimated
manufacturing overhead for the year as well as the manufacturing overhead at capacity
and the actual amount of manufacturing overhead for the year.
required:
a. determine the predetermined overhead rate if the predetermined overhead rate is
based on the amount of the allocation base at capacity.
b. determine the underapplied or overapplied overhead for the year if the predetermined
overhead rate is based on the amount of the allocation base at capacity.
2) the following labor standards have been established for a particular product:
the following data pertain to operations concerning the product for the last month:
what is the labor rate variance for the month?
a.$160 u
b.$160 f
c.$480 u
d.$480 f
3) the dexon company makes and sells a single product called a mip and uses a standard
costing system. the following standards have been established for one unit of mip:
there were no inventories of any kind on august 1. during august, the following events
occurred:
purchased 15,000 board feet at the total cost of $24,000.
used 12,000 board feet to produce 2,100 mips.
used 1,700 hours of direct labor time at a total cost of $20,060.
to record the purchase of direct materials, the general ledger would include what entry
to the materials price variance account?
a.$1,500 credit
b.$1,500 debit
c.$6,000 credit
d.$6,000 debit
4) (ignore income taxes in this problem.) the management of eversman corporation is
considering the following three investment projects:
rank the projects according to the profitability index, from most profitable to least
profitable.
a.v,u,w
b.u,w,v
c.w,v,u
d.v,w,u
5) veale corporation’s most recent balance sheet appears below:
net income for the year was $107. cash dividends were $29.
the net cash provided by (used by) operations for the year was:
a.$17
b.$90
c.$124
d.$153
6) cahin corporation applies manufacturing overhead on the basis of machine-hours. at
the beginning of the most recent year, the company based its predetermined overhead
rate on total estimated overhead of $21,060. actual manufacturing overhead for the year
amounted to $13,000 and actual machine-hours were 1,380. the company’s
predetermined overhead rate for the year was $16.20 per machine-hour.
the overhead for the year was:
a.$1,296 overapplied
b.$9,356 overapplied
c.$9,356 underapplied
d.$1,296 underapplied
7) a manufacturing company uses a standard costing system in which standard
machine-hours (mhs) is the measure of activity. data from the company’s flexible
budget for manufacturing overhead are given below:
the following data pertain to operations for the most recent period:
what was the variable overhead rate variance for the period to the nearest dollar?
a.$1,875 u
b.$900 f
c.$900 u
d.$1,875 f
8) the following information is available on company a:
company a’s return on investment (roi) is:
a.4%
b.15%
c.20%
d.36%
9) laboe 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 2,900 tenant-days, but its actual level of activity was 2,940 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.$7,814
b.$7,770
c.$7,922
d.$7,782
10) malaviya corporation uses the fifo method in its process costing system. operating
data for the casting department for the month of september appear below:
according to the company’s records, the conversion cost in beginning work in process
inventory was $63,104 at the beginning of september. additional conversion costs of
$654,240 were incurred in the department during the month.
what would be the cost per equivalent unit for conversion costs for september? (round
off to three decimal places.)
a.$8.060
b.$9.280
c.$9.087
d.$9.400
11) under variable costing, the company’s net operating income for the year would be:
a.$60,000 higher than under absorption costing
b.$108,000 higher than under absorption costing
c.$108,000 lower than under absorption costing
d.$60,000 lower than under absorption costing
12) the segment margin ratio in store j was:
a.16%
b.24%
c.40%
d.60%
13) mcbee products inc. makes two productsc38s and v81z. product c38s’s selling price
is $91.00 and its unit variable cost is $72.80. product v81z’s selling price is $200.00 and
its unit variable cost is $180.00. the monthly demand is 890 units for product c38s and
680 units for v81z. the constrained resource is a particular machine that is available for
10,000 minutes each month. each unit of product c38s requires 7 minutes on this
machine and each unit of product v81z requires 10 minutes on this machine.
the company is considering launching a new product that would have a variable cost of
$191.00 per unit and no avoidable fixed costs. it would require 4 minutes of the
constrained resource. the absolute minimum acceptable selling price for the new
product should be:
a.$191.00
b.$199.00
c.$193.00
d.$201.40
14) what is the cause of the difference between absorption costing net operating income
and variable costing net operating income?
a.absorption costing deducts all manufacturing costs from net operating income;
variable costing deducts only prime costs
b.absorption costing allocates fixed manufacturing costs between cost of goods sold and
inventories; variable costing considers all fixed manufacturing costs to be period costs
c.absorption costing includes variable manufacturing costs in product costs; variable
costing considers variable manufacturing costs to be period costs
d.absorption costing includes fixed administrative costs in product costs; variable
costing considers fixed administrative costs to be period costs
15) which of the following costs are always irrelevant in decision making?
a.avoidable costs
b.sunk costs
c.opportunity costs
d.fixed costs
16) accola company uses activity-based costing. the company has two products: a and
b. the annual production and sales of product a is 1,100 units and of product b is 700
units. there are three activity cost pools, with estimated costs and expected activity as
follows:
the activity rate for activity 3 is closest to:
a.$119.72
b.$116.18
c.$26.67
d.$56.74
17) the management of radke corporation has provided the following data concerning
its two productsf74 and e50:
the constrained resource is a particular machine that is available for 10,200 minutes
each month. each unit of product f74 requires 7 minutes on this machine. each unit of
product e50 requires 16 minutes on this machine.
what is the maximum contribution margin the company can earn per month?
a.$70,472
b.$52,088
c.$54,272
d.$49,592
18) pardise company plans the following beginning and ending inventory levels (in
units) for july:
two units of raw material are needed to produce each unit of finished product.
how much of the raw material should the company purchase during the year?
a.4,720,000 grams
b.4,700,000 grams
c.4,730,000 grams
d.4,740,000 grams
19) the april contribution format income statement of iannacone corporation appears
below:
the degree of operating leverage is closest to:
a.11.28
b.0.29
c.3.50
d.0.09