1) Barker Corporation uses the weighted-average method in its process costing system.
This month, the beginning inventory in the first processing department consisted of 300
units. The costs and percentage completion of these units in beginning inventory were:
A total of 9,100 units were started and 8,700 units were transferred to the second
processing department during the month. The following costs were incurred in the first
processing department during the month:
The ending inventory was 85% complete with respect to materials and 20% complete
with respect to conversion costs.
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 materials for the month in the first processing
department is closest to:
A.$26.35
B.$25.85
C.$26.65
D.$25.56
2) The net present value of the alternative of replacing the present system with the
proposed new system is closest to:
A.$(233,300)
B.$(283,300)
C.$(263,100)
D.$(273,100)
3) If the F-27 product is added next year, the change in operating income should be:
A) $30,000 increase
B) $5,000 decrease
C) $23,000 increase
D) $15,000 increase
4) The best estimate of the total monthly fixed manufacturing cost is:
A) $1,027,200
B) $1,060,300
C) $1,093,400
D) $630,000
5) The company’s debt-to-equity ratio at the end of Year 2 is closest to:
A.0.29
B.0.38
C.0.23
D.0.64
6) Ibarra 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 materials for the month in the first processing
department is closest to:
A.$11.76
B.$13.20
C.$12.65
D.$12.27
7) The income tax expense in year 2 is:
A.$27,000
B.$21,000
C.$39,000
D.$6,000
Depreciation expense = (Original cost – Salvage value) / Useful life
= ($160,000 – $0) / 4 years = $40,000 per year
8) An increase in accrued liabilities of $1,000 during a year would be shown on the
company’s statement of cash flows prepared under the indirect method as:
A.an addition to net income of $1,000 in order to arrive at net cash provided by
operating activities.
B.a deduction from net income of $1,000 in order to arrive at net cash provided by
operating activities.
C.a deduction of $1,000 under investing activities.
D.an addition of $1,000 under financing activities.
9) The net present value of the entire project is closest to:
A.$123,268
B.$193,060
C.$109,608
D.$203,000
Depreciation expense = (Original cost – Salvage value) / Useful life
= ($160,000 – $0) / 4 years = $40,000 per year
10) The company is considering launching a new product that would have a variable
cost of $134.00 per unit and no avoidable fixed costs. It would require 16 minutes of
the constrained resource. The absolute minimum acceptable selling price for the new
product should be:
A.$175.60
B.$185.20
C.$136.60
D.$134.00
11) If the company bases its predetermined overhead rate on capacity, by how much
was manufacturing overhead underapplied or overapplied?
The management of Richbourg Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. The company’s controller
has provided an example to illustrate how this new system would work. In this
example, the allocation base is machine-hours and the estimated amount of the
allocation base for the upcoming year is 63,000 machine-hours. In addition, capacity is
70,000 machine-hours and the actual level of activity for the year is 66,200
machine-hours. All of the manufacturing overhead is fixed and is $2,866,500 per year.
For simplicity, it is assumed that this is the estimated manufacturing overhead for the
year as well as the manufacturing overhead at capacity. It is further assumed that this is
also the actual amount of manufacturing overhead for the year.
A.$87,232 Underapplied
B.$87,232 Overapplied
C.$27,648 Overapplied
D.$27,648 Underapplied
12) The following data were provided by Rider, Inc, which produces a single product:
Under absorption costing, the unit product cost is:
A.$19 per unit
B.$13 per unit
C.$10 per unit
D.$14 per unit
13) Klicker Corporation’s most recent balance sheet appears below:
The company’s net income for the year was $152 and it did not issue any bonds or
repurchase any of its common stock during the year. Cash dividends were $40. The net
cash provided by (used in) financing activities for the year was:
A.($49)
B.($40)
C.$4
D.($13)