Income from operations of the Pierce Automobile Division is $2,225,000. If income
from operations before service department charges is $3,250,000,
a. operating expenses are $1,025,000
b. total service department charges are $1,025,000
c. noncontrollable charges are $1,025,000
d. direct manufacturing charges are $1,025,000
Based on the following data for the current year, what is the number of days’ sales in
inventory?
Sales on account during year $1,204,500
Cost of merchandise sold during year 657,000
Accounts receivable, beginning of year 75,000
Accounts receivable, end of year 85,000
Inventory, beginning of year 85,600
Inventory, end of year
a. 51.2 98,600
b. 44.4
c. 6.5
d. 7.5
An anticipated purchase of equipment for $520,000, with a useful life of 8 years and no
residual value, is expected to yield the following annual net incomes and net cash
flows:
What is the cash payback period?
a. 5 years
b. 4 years
c. 6 years
d. 3 years
If the standard to produce a given amount of product is 1,000 units of direct materials at
$11 and the actual was 800 units at $12, the direct materials price variance was $800
favorable.
a. True
b. False
current ratio
Match each ratio that follows to its use (items a’“h). Items may be used more than
once.
a. assess the profitability of the assets
b. assess the effectiveness in the use of assets
c. indicate the ability to meet currently maturing obligations
d. indicate the margin of safety to creditors
e. indicate instant debt-paying ability
f. assess the profitability of the investment by common stockholders
g. indicate future earnings prospects
h. indicate the extent to which earnings are being distributed to common stockholders
What term is used to describe the process of developing the organization’s objectives
and translating those into courses of action?
a. supervising
b. planning
c. improving
d. decision making
If Division Q’s yearly income from operations was $30,000 on invested assets of
$200,000, the rate of return on investment is 15%.
a. True
b. False
Period costs include
a. current assets on the balance sheet
b. current liabilities on the balance sheet
c. operating costs that are shown on the income statement when products are sold
d. operating costs that are shown on the income statement in the period in which they
are incurred
Heedy Company is trying to decide how many units of merchandise to produce each
month. The company policy is to have 20% of the next month’s sales in inventory at the
end of each month. Projected sales for August, September, and October are 30,000
units, 20,000 units, and 40,000 units, respectively. How many units must be produced in
September?
a. 24,000
b. 18,000
c. 28,000
d. 22,000
Generally provides the most useful report for setting long-term prices.
Match each phrase that follows with the term (a-c) it describes.
a. Absorption costing only
b. Variable costing only
c. Both absorption and variable costing
When a plantwide factory overhead rate is used, the total overhead costs allocated to all
products are the same.
a. True
b. False
setting goals
Match each phrase that follows with the term (a-e) it describes.
a. planning
b. directing
c. controlling
d. budget slack
e. goal conflict
Only the value of the inventory that is sold will appear on the income statement.
a. True
b. False
A report analyzing the dollar savings of purchasing new equipment to speed up the
production process is a managerial accounting report.
a. True
b. False
Reynolds Manufacturers Inc. has estimated total factory overhead costs of $95,000 and
expected direct labor hours of 9,500 for the current fiscal year. If job number 117
incurred 2,300 direct labor hours, Work in Process will be debited and Factory
Overhead will be credited for
a. $21,850
b. $2,300
c. $95,000
d. $23,000
Cost-plus methods determine the normal selling price by estimating a cost amount per
unit and adding a markup.
a. True
b. False