1) the same constrained resource is used by four different products at porraz
corporation. data concerning those products appear below:
the company does not have enough of the constrained resource to satisfy for demand of
all four products.
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?
a.y400
b.y200
c.y100
d.y300
2) crick corporation makes 11,000 units of part w28 each year. this part is used in one of
the company’s products. the company’s accounting department reports the following
costs of producing the part at this level of activity:
an outside supplier has offered to make and sell the part to the company for $25.50
each. if this offer is accepted, the supervisor’s salary and all of the variable costs,
including direct labor, can be avoided. the special equipment used to make the part was
purchased many years ago and has no salvage value or other use. the allocated general
overhead represents fixed costs of the entire company. if the outside supplier’s offer
were accepted, only $18,000 of these allocated general overhead costs would be
avoided. in addition, the space used to produce part w28 would be used to make more
of one of the company’s other products, generating an additional segment margin of
$12,000 per year for that product.
what would be the impact on the company’s overall net operating income of buying part
w28 from the outside supplier?
a.net operating income would decline by $65,000 per year
b.net operating income would increase by $5,800 per year
c.net operating income would decline by $89,000 per year
d.net operating income would increase by $12,000 per year
3) assume there is no beginning work in process inventory and the ending work in
process inventory is 100% complete with respect to materials costs. the number of
equivalent units with respect to materials costs under the weighted-average method is:
a.the same as the number of units put into production
b.less than the number of units put into production
c.the same as the number of units completed
d.less than the number of units completed
4) which two terms below describe the wages paid to security guards that monitor a
factory 24 hours a day?
a.variable cost and direct cost
b.fixed cost and direct cost
c.variable cost and indirect cost
d.fixed cost and indirect cost
5) web company uses a standard cost system in which manufacturing overhead is
applied to units of product on the basis of standard machine-hours. during february, the
company used a denominator activity of 80,000 machine-hours in computing its
predetermined overhead rate. however, only 75,000 standard machine-hours were
allowed for the month’s actual production. if the fixed manufacturing overhead volume
variance for february was $6,400 unfavorable, then the total budgeted fixed
manufacturing overhead cost for the month was:
a.$96,000
b.$102,400
c.$100,000
d.$98,600
6) at an activity level of 2,400 units, kloster corporation’s total variable cost is $118,008
and its total fixed cost is $9,000.
required:
for the activity level of 2,500 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.
7) tosta 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 may, the kennel budgeted for
2,100 tenant-days, but its actual level of activity was 2,050 tenant-days. the kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for may:
the overall revenue and spending variance (i.e., the variance for net operating income in
the revenue and spending variance column on the flexible budget performance report)
for may would be closest to:
a.$3,490 f
b.$2,770 f
c.$3,490 u
d.$2,770 u
8) ldg corporation makes and sells a product called product wz. each unit of product wz
requires 2.0 hours of direct labor at the rate of $10.50 per direct labor-hour.
management would like you to prepare a direct labor budget for june.
the company plans to sell 22,000 units of product wz in june. the finished goods
inventories on june 1 and june 30 are budgeted to be 100 and 400 units, respectively.
budgeted direct labor costs for june would be:
a.$234,150
b.$468,300
c.$462,000
d.$455,700
9) tevlin corporation would like to determine the relative profitability of a number of
jobs. for illustration purposes, the company has provided the following data for job
h90x:
what is the profitability index for job h90x?
a.$224 per hour
b.$560 per hour
c.$336 per hour
d.0.40
10) relative profitability measures should only be used when:
a.absolute profitability measures fail to provide a decision
b.absolute profitability measures cannot be used
c.a constraint forces a trade-off among segments
d.market shares are falling