1) hilty corporation produces and sells two products. in the most recent month, product
u77d had sales of $45,000 and variable expenses of $15,750. product d86d had sales of
$49,000 and variable expenses of $22,790. and the fixed expenses of the entire
company were $46,170. the break-even point for the entire company is closest to:
a.$47,830
b.$84,710
c.$46,170
d.$78,254
2) the spending variance for selling and administrative expense in march would be
closest to:
a.$20,580 f
b.$24,340 u
c.$24,340 f
d.$20,580 u
3) porter company has provided the following data for the second quarter of the most
recent year:
assume that direct labor is a variable cost and that there were no beginning or ending
inventories.
the total contribution margin of porter company for the second quarter was:
a.$37,250
b.$87,000
c.$176,000
d.$211,000
4) velten corporation’s flexible budget performance report for last month shows that
actual indirect materials cost, a variable cost, was $45,198 and that the spending
variance for indirect materials cost was $9,114 favorable. during that month, the
company worked 18,600 machine-hours. budgeted activity for the month had been
19,000 machine-hours. the cost formula per machine-hour for indirect materials cost
must have been closest to:
a.$1.90
b.$2.86
c.$1.94
d.$2.92
5) (ignore income taxes in this problem.) the management of cerra corporation is
considering three investment projects i, j, and k. project i would require an investment
of $18,000, project j of $42,000, and project k of $85,000. the present value of the cash
inflows would be $19,260 for project i, $45,780 for project j, and $91,800 for project k.
rank the projects according to the profitability index, from most profitable to least
profitable.
a.j,k,i
b.k,j,i
c.k,i,j
d.i,k,j
6) (ignore income taxes in this problem.) eckels corporation is considering the
following three investment projects:
rank the projects according to the profitability index, from most profitable to least
profitable.
a.n,o,m
b.o,n,m
c.m,n,o
d.n,m,o
7) data concerning sa corporation’s single product appear below:
fixed expenses are $445,000 per month. the company is currently selling 6,000 units per
month. the marketing manager would like to introduce sales commissions as an
incentive for the sales staff. the marketing manager has proposed a commission of $9
per unit. in exchange, the sales staff would accept a decrease in their salaries of $43,000
per month. (this is the company’s savings for the entire sales staff.) the marketing
manager predicts that introducing this sales incentive would increase monthly sales by
100 units. what should be the overall effect on the company’s monthly net operating
income of this change?
a.decrease of $88,900
b.decrease of $2,900
c.increase of $42,100
d.increase of $537,100
8) iffert corporation’s net income last year was $4,040,000. the dividend on common
stock was $6.40 per share and the dividend on preferred stock was $2.30 per share. the
market price of common stock at the end of the year was $43.30 per share. throughout
the year, 300,000 shares of common stock and 100,000 shares of preferred stock were
outstanding. the dividend payout ratio is closest to:
a.0.50
b.0.91
c.1.02
d.0.48
9) eccles corporation uses a job-order costing system and applies overhead to jobs using
a predetermined overhead rate. during the year the company’s finished goods inventory
account was debited for $384,000 and credited for $325,900. the ending balance in the
finished goods inventory account was $72,100. at the end of the year, manufacturing
overhead was underapplied by $5,400.
the direct materials cost was:
a.$3,600
b.$6,600
c.$5,000
d.$8,000
10) braston corporation is a small wholesaler of gourmet food products. data regarding
the store’s operations follow:
sales are budgeted at $350,000 for november, $330,000 for december, and $340,000 for
january.
collections are expected to be 70% in the month of sale, 26% in the month following
the sale, and 4% uncollectible.
the cost of goods sold is 70% of sales.
the company purchases 50% of its merchandise in the month prior to the month of sale
and 50% in the month of sale. payment for merchandise is made in the month following
the purchase.
other monthly expenses to be paid in cash are $20,100.
monthly depreciation is $22,000.
ignore taxes.
expected cash collections in december are:
a.$91,000
b.$330,000
c.$322,000
d.$231,000
11) kimbeth manufacturing makes dust density sensors (dds), a safety device for the
mining industry. the company uses a process costing system and has only a single
processing department. the following information pertains to operations for the month
of may:
the beginning work in process inventory was 60% complete with respect to materials
and 20% complete with respect to conversion costs. the ending work in process
inventory was 90% complete with respect to materials and 40% complete with respect
to conversion costs. the costs were as follows:
using the fifo method, the cost per equivalent unit of materials for may is closest to:
a.$4.12
b.$4.50
c.$4.60
d.$4.80
12) a partial listing of costs incurred during february at urfer corporation appears below:
the total of the product costs listed above for february is:
a.$277,000
b.$595,000
c.$318,000
d.$61,000
13) lauter printing uses two measures of activity, press runs and book set-ups, in the
cost formulas in its budgets and performance reports. the cost formula for wages and
salaries is $5,300 per month plus $480 per press run plus $1,080 per book set-up. the
company expected its activity in october to be 169 press runs and 64 book set-ups, but
the actual activity was 167 press runs and 60 book set-ups. the actual cost for wages and
salaries in october was $155,690.
the wages and salaries in the planning budget for october would be closest to:
a.$157,555
b.$155,690
c.$150,260
d.$155,540
14) data concerning plaxco corporation’s single product appear below:
assume the company’s monthly target profit is $11,000. the unit sales to attain that
target profit is closest to:
a.7,692
b.13,349
c.4,005
d.5,721
15) the following is last month’s contribution format income statement:
what is the company’s margin of safety in dollars?
a.$100,000
b.$600,000
c.$1,500,000
d.$250,000
16) the following data have been provided by a company:
compute the amount of direct materials used during november if $20,000 in raw
materials were purchased during the month.
a.$21,000
b.$19,000
c.$18,000
d.$15,000
17) arline cane products, inc., processes sugar cane in batches. the company buys a
batch of sugar cane from farmers for $56 which is then crushed in the company’s plant
at a cost of $14. two intermediate products, cane fiber and cane juice, emerge from the
crushing process. the cane fiber can be sold as is for $24 or processed further for $14 to
make the end product industrial fiber that is sold for $34. the cane juice can be sold as is
for $40 or processed further for $23 to make the end product molasses that is sold for
$80. how much profit (loss) does the company make by processing one batch of sugar
cane into the end products industrial fiber and molasses?
a.$13
b.($6)
c.($107)
d.$7