Broze Company makes four products in a single facility. These products have the
following unit product costs:
Additional data concerning these products are listed below.
The grinding machines are potentially the constraint in the production facility. A total of
53,600 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Which product makes the LEAST profitable use of the grinding machines?
A. Product A
B. Product B
C. Product C
D. Product D
Answer:
Gorovitz Corporation’s most recent balance sheet appears below:
The company’s net income for the year was $86 and it did not issue any bonds or
repurchase any of its common stock during the year. Cash dividends were $23. The net
cash provided by (used in) financing activities for the year was:
A. $4
B. $(15)
C. $(23)
D. $(34)
Answer:
Megna Company’s net income last year was $143,000. Changes in the company’s
balance sheet accounts for the year appear below:
The company paid a cash dividend and it did not dispose of any long-term investments
or property, plant, and equipment. The company did not issue any bonds payable or
repurchase any of its own common stock. The following question pertain to the
company’s statement of cash flows.
The free cash flow for the year was:
A. $142,000
B. $148,000
C. $301,000
D. $93,000
Answer:
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) $1,325 U
B) $1,780 F
C) $430 F
D) $430 U
Answer:
Jumpst Corporation uses the cost formula Y = $3,600 + $0.30X for the maintenance
cost in Department B, where X is machine-hours. The August budget is based on
20,000 hours of planned machine time. Maintenance cost expected to be incurred
during August is:
A. $3,600
B. $6,000
C. $6,300
D. $9,600
Answer:
Entin Corporation reported the following data for the month of January:
The cost of goods manufactured for January is:
A. $202,000
B. $214,000
C. $217,000
D. $199,000
Answer:
In August, one of the processing departments at Knepp Corporation had beginning work
in process inventory of $17,000 and ending work in process inventory of $13,000.
During the month, $178,000 of costs were added to production.
In the department’s cost reconciliation report for August, the cost of units transferred
out of the department would be:
A. $182,000
B. $195,000
C. $169,000
D. $165,000
Answer:
Butscher Company allocates materials handling cost to the company’s two products
using the below data:
The total materials handling cost for the year is expected to be $9,072.
If the materials handling cost is allocated on the basis of material moves, how much of
the total materials handling cost should be allocated to the modular homes? (Round off
your answer to the nearest whole dollar.)
A. $5,885
B. $7,056
C. $7,938
D. $4,536
Answer:
The Odle Company makes and sells a single product called a Kitt. Odle uses a standard
costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound
and 0.9 direct labor-hours at $15 per hour. There were no inventories of any kind on
June 1. During June, the following events occurred:
– Purchased 17,000 pounds of material at a total cost of $190,000.
– Used 15,000 pounds of material to produce 2,400 Kitts.
– Used 1,900 hours of direct labor time at a total cost of $38,000.
To record the purchase of direct materials, the general ledger would include what kind
of entry to the Materials Price Variance Account?
A. $14,000 credit
B. $14,000 debit
C. $10,000 credit
D. $10,000 debit
Answer:
Budget data for the Bidwell Company are as follows:
Bidwell’s break-even sales in units is:
A. 30,000 units
B. 91,000 units
C. 60,000 units
D. 70,000 units
Answer:
A manufacturer of tiling grout has supplied the following data:
The company’s degree of operating leverage is closest to:
A. 8.64
B. 1.55
C. 4.00
D. 1.08
Answer:
At the beginning of August, Hogancamp Corporation had $26,000 of raw materials on
hand. During the month, the company purchased an additional $73,000 of raw
materials. During August, $77,000 of raw materials were requisitioned from the
storeroom for use in production. The credits to the Raw Materials account for the month
of August total:
A. $73,000
B. $77,000
C. $99,000
D. $26,000
Answer:
Aide Industries is a division of a major corporation. Data concerning the most recent
year appears below:
The division’s margin is closest to:
A. 21.8%
B. 5.0%
C. 23.0%
D. 28.0%
Answer:
Heller Corporation uses the weighted-average method in its process costing system.
Data concerning the first processing department for the most recent month are listed
below:
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A. $18.29
B. $17.42
C. $15.54
D. $17.10
Answer:
The Materials Quantity Variance for May would be recorded as a:
A) Debit of $4,788
B) Debit of $16,644
C) Credit of $4,788
D) Credit of $16,644
Answer:
Reference: 8A-10
A furniture manufacturer has a standard costing system based on standard direct
labor-hours (DLHs) as the measure of activity. Data from the companys flexible budget
for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What was the fixed manufacturing overhead volume variance for the period to the
nearest dollar?
A) $2,486 U
B) $1,511 U
C) $975 U
D) $2,653 U
Answer:
The Carlquist Company makes and sells a product called Product K. Each unit of
Product K sells for $24 dollars and has a unit variable cost of $18. The company has
budgeted the following data for November:
– Sales of $1,152,200, all in cash.
– A cash balance on November 1 of $48,000.
– Cash disbursements (other than interest) during November of $1,160,000.
– A minimum cash balance on November 30 of $60,000.
If necessary, the company will borrow cash from a bank. The borrowing will be in
multiples of $1,000 and will bear interest at 2% per month. All borrowing will take
place at the beginning of the month. The November interest will be paid in cash during
November.
The amount of cash needed to be borrowed on November 1 to cover all cash
disbursements and to obtain the desired November 30 cash balance is:
A. $20,000
B. $21,000
C. $37,000
D. $38,000
Answer:
Branden Company uses the FIFO method in its process costing system. All materials
are introduced at the beginning of the process in Department One. The following data
relate to the month of May for Department One:
What are the equivalent units for the month of May?
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
Reference: 8A-12
The Chase Company has a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours (DLHs). The company recorded the
following activity and cost data relating to manufacturing overhead for October:
The amount of fixed manufacturing overhead cost that was estimated for September
was:
A) $45,900
B) $54,768
C) $49,920
D) $47,703
Answer:
Hick Corporation’s most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $60 thousand. Dividends on
preferred stock totaled $20 thousand. The market price of common stock at the end of
Year 2 was $9.57 per share.
The book value per share at the end of Year 2 is closest to:
A. $4.35
B. $5.35
C. $0.55
D. $6.95
Answer:
Victorin Corporation has provided the following data concerning its only product:
The margin of safety as a percentage of sales is closest to:
A. 19%
B. 77%
C. 23%
D. 81%
Answer:
Last month 75,000 pounds of direct material were purchased and 71,000 pounds were
used. If the actual purchase price per pound was $0.50 more than the standard purchase
price per pound, then the materials price variance was:
A) $2,000 F
B) $37,500 F
C) $37,500 U
D) $35,500 U
Answer:
Cannedy Corporation’s most recent balance sheet appears below:
The company’s net income for the year was $74 and it did not sell or retire any property,
plant, and equipment during the year. Cash dividends were $21. The net cash provided
by (used in) investing activities for the year was:
A. $(53)
B. $35
C. $(35)
D. $53
Answer:
With regard to the CVP graph, which of the following statements is not correct?
A. The CVP graph assumes that volume is the only factor affecting total cost.
B. The CVP graph assumes that selling prices do not change.
C. The CVP graph assumes that variable costs go down as volume goes up.
D. The CVP graph assumes that fixed expenses are constant in total within the relevant
range.
Answer:
Lusk Company produces and sells 15,000 units of Product A each month. The selling
price of Product A is $20 per unit, and variable expenses are $14 per unit. A study has
been made concerning whether Product A should be discontinued. The study shows that
$70,000 of the $100,000 in fixed expenses charged to Product A would continue even if
the product was discontinued. These data indicate that if Product A is discontinued, the
company’s overall net operating income would:
A. decrease by $60,000 per month
B. increase by $10,000 per month
C. increase by $20,000 per month
D. decrease by $20,000 per month
Answer:
The following data have been recorded for recently completed Job 674 on its job cost
sheet. Direct materials cost was $2,039. A total of 32 direct labor-hours and 175
machine-hours were worked on the job. The direct labor wage rate is $14 per
labor-hour. The company applies manufacturing overhead on the basis of
machine-hours. The predetermined overhead rate is $15 per machine-hour. The total
cost for the job on its job cost sheet would be:
A. $2,967
B. $2,487
C. $2,068
D. $5,112
Answer:
Carr Company produces a single product. During the past year, Carr manufactured
25,000 units and sold 20,000 units. Production costs for the year were as follows:
Sales totaled $850,000, variable selling expenses totaled $110,000, and fixed selling
and administrative expenses totaled $170,000. There were no units in beginning
inventory. Assume that direct labor is a variable cost.
Under absorption costing, the ending inventory for the year would be valued at:
A. $179,500
B. $213,500
C. $222,000
D. $152,000
Answer:
The Chase Company has a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours (DLHs). The company recorded the
following activity and cost data relating to manufacturing overhead for October:
The amount of fixed manufacturing overhead cost that was estimated for September
was:
A. $45,900
B. $54,768
C. $49,920
D. $47,703
Answer:
Reed Company’s sales last year totaled $150,000 and its return on investment (ROI)
was 12%. If the company’s turnover was 3, then its net operating income for the year
must have been:
A. $6,000
B. $2,000
C. $18,000
D. it is impossible to determine from the data given.
Answer:
Spade Company recorded the following events last year:
On the statement of cash flows, some of these events are classified as operating
activities, some are classified as investing activities, and some are classified as
financing activities.
Based solely on the information above, the net cash provided by (used in) financing
activities on the statement of cash flows would be:
A. $41,000
B. $(85,000)
C. $947,000
D. $(67,000)
Answer:
Reference: 8A-16
An outdoor barbecue grill manufacturer has a standard costing system based on
standard direct labor-hours (DLHs) as the measure of activity. Data from the companys
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What was the fixed manufacturing overhead budget variance for the period to the
nearest dollar?
A) $2,750 U
B) $2,570 U
C) $1,850 F
D) $161 F
Answer:
During July at Tiner Corporation, $74,000 of raw materials were requisitioned from the
storeroom for use in production. These raw materials included both direct and indirect
materials. The indirect materials totaled $7,000. The journal entry to record this
requisition would include a debit to Manufacturing Overhead of:
A. $0
B. $74,000
C. $7,000
D. $67,000
Answer:
Excerpts from Tigner Corporation’s most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,230 and the cost of goods sold was $820.
The accounts receivable turnover for Year 2 is closest to:
A. 7.10
B. 0.91
C. 8.79
D. 1.10
Answer:
The following standards for variable overhead have been established for a company that
makes only one product:
The following data pertain to operations for the last month:
Required:
a. What is the variable overhead rate variance for the month?
b. What is the variable overhead efficiency variance for the month?
Answer: