1) The income tax expense in year 3 is:
A.$21,000
B.$6,000
C.$9,000
D.$15,000
2) Which of the following comparisons best isolates the impact that changes in
operating efficiency have on performance?
A.static planning budget and flexible budget
B.static planning budget and actual results
C.flexible budget and actual results
D.master budget and static planning budget
3) Assume the company has 50 units left over from last year which have small defects
and which will have to be sold at a reduced price for scrap. The sale of these defective
units will have no effect on the company’s other sales. Which of the following costs is
relevant in this decision?
A.$3.50 variable manufacturing cost
B.$3.90 unit product cost
C.$2.00 variable selling and administrative cost
D.$6.70 full cost
4) Rosenbrook Corporation has provided the following data from its activity-based
costing system:
Data concerning one of the company’s products, Product H73N, appear below:
According to the activity-based costing system, the product margin for product H73N
is:
A.$7,275.90
B.$6,661.90
C.$18,837.00
D.$8,425.90
5) The journal entry below:
indicates that:
A.the total labor variance was $800, unfavorable.
B.employees received an unexpected rate increase during the period.
C.more labor time was required to complete the output of the period than was allowed
at standard.
6) In addition to the facts given above, assume that the space used to produce part J56
could be used to make more of one of the company’s other products, generating an
additional segment margin of $13,000 per year for that product. What would be the
impact on the company’s overall net operating income of buying part J56 from the
outside supplier and using the freed space to make more of the other product?
A) Net operating income would decline by $31,000 per year.
B) Net operating income would decline by $23,000 per year.
C) Net operating income would increase by $3,000 per year.
D) Net operating income would increase by $13,000 per year.
7) ( Tangen Corporation is considering the purchase of a machine that would cost
$380,000 and would last for 6 years. At the end of 6 years, the machine would have a
salvage value of $80,000. By reducing labor and other operating costs, the machine
would provide annual cost savings of $104,000. The company requires a minimum
pretax return of 14% on all investment projects. The net present value of the proposed
project is closest to:
A.$104,456
B.$24,456
C.$133,753
D.$60,936
8) Wales 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 2,700 tenant-days, but its actual level of activity was 2,730 tenant-days. The kennel
has provided the following data concerning the formulas to be used in its budgeting:
The net operating income in the planning budget for February would be closest to:
A.$9,100
B.$12,123
C.$8,800
D.$11,858
9) Poriss Corporation makes and sells a single product called a Yute. The company is in
the process of preparing its Selling and Administrative Expense Budget for the last
quarter of the year. The following budget data are available:
All of these expenses (except depreciation) are paid in cash in the month they are
incurred.
If the total budgeted selling and administrative expense for October is $459,200, then
how many Yutes does the company plan to sell in October?
A.13,300 units
B.12,500 units
C.13,000 units
D.12,800 units
10) Dagger Corporation uses direct labor-hours in its predetermined overhead rate. At
the beginning of the year, the total estimated manufacturing overhead was $423,870. At
the end of the year, actual direct labor-hours for the year were 19,400 hours,
manufacturing overhead for the year was underapplied by $5,650, and the actual
manufacturing overhead was $418,870. The predetermined overhead rate for the year
must have been closest to:
A.$21.59
B.$20.76
C.$21.30
D.$21.85
11) The payback period for the new machine is about:
A.6.0 years
B.1.5 years
C.5.4 years
D.3.75 years
12) Okamoto Corporation’s management believes that every 7% increase in the selling
price of one of the company’s products would lead to a 10% decrease in the product’s
total unit sales. The variable cost per unit of this product is $20.
Required:
a. Compute the product’s price elasticity of demand as defined in the text to two
decimal places.
b. Compute the product’s profit-maximizing price according to the formula in the text.
13) In December, one of the processing departments at Rumsey Corporation had ending
work in process inventory of $21,000. During the month, $110,000 of costs were added
to production and the cost of units transferred out from the department was $99,000.
In the department’s cost reconciliation report for January, the cost of beginning work in
process inventory for the department would be:
A.$32,000
B.$78,000
C.$89,000
D.$10,000
14) Abbott Company’s manufacturing overhead is 20% of its total conversion costs. If
direct labor is $38,000 and if direct materials are $23,000, the manufacturing overhead
is:
A) $9,500
B) $152,000
C) $5,750
D) $15,250