1) a new product, an automated crepe maker, is being introduced at boorman
corporation. at a selling price of $72 per unit, management projects sales of 20,000
units. launching the crepe maker as a new product would require an investment of
$700,000. the desired return on investment is 14%. the target cost per crepe maker is
closest to:
a.$72.00
b.$82.08
c.$76.49
d.$67.10
2) orion corporation is preparing a cash budget for the six months beginning january 1.
shown below are the company’s expected collection pattern and the budgeted sales for
the period.
expected collection pattern:
65% collected in the month of sale
20% collected in the month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
budgeted sales:
the estimated total cash collections during april from sales and accounts receivables
would be:
a.$155,900
b.$167,000
c.$171,666
d.$173,400
3) jabal corporation makes a product with the following costs:
the company uses the absorption costing approach to cost-plus pricing described in the
text. the pricing calculations are based on budgeted production and sales of 28,000 units
per year.
the company has invested $560,000 in this product and expects a return on investment
of 10%.
the markup on absorption cost would be closest to:
a.46.0%
b.10.0%
c.141.1%
d.49.7%
4) the holmes division recorded operating data as follows for the past year:
for the past year, the return on investment was:
a.15.75%
b.20.50%
c.25.00%
d.31.25%
5) the management of dando corporation has provided the following data concerning its
two products:
the constrained resource is a particular machine that is available for 10,100 minutes
each month.
how many units of product y43l should be produced each month?
a.0
b.700
c.1,328
d.382
6) an example of a cost that is variable with respect to the number of units produced and
sold is:
a.insurance on the headquarters building
b.power to run production equipment
c.supervisory salaries
d.depreciation of factory facilities
7) auger inc. uses the weighted-average method in its process costing system. the
following data concern the operations of the company’s first processing department for
a recent month.
required:
a. determine the equivalent units of production.
b. determine the costs per equivalent unit.
c. determine the cost of ending work in process inventory.
d. determine the cost of the units transferred to the next department.
8) roberts enterprises has budgeted sales in units for the next five months as follows:
past experience has shown that the ending inventory for each month must be equal to
10% of the next month’s sales in units. the inventory on may 31 contained 410 units. the
company needs to prepare a production budget for the second quarter of the year.
the beginning inventory for september should be:
a.900 units
b.1,035 units
c.1,020 units
d.1,050 units
9) gorsche company’s management has found that every 3% increase in the selling price
of one of the company’s products leads to a 8% decrease in the product’s total unit sales.
the product’s absorption costing unit product cost is $11.50. the variable production cost
of the product is $6.20 per unit and the variable selling and administrative cost is $1.00
per unit.
according to the formula in the text, the product’s profit-maximizing price is closest to:
a.$11.15
b.$11.91
c.$19.65
d.$17.82
10) giaquinto corporation reports that at an activity level of 7,600 units, its total
variable cost is $182,856 and its total fixed cost is $444,296.
required:
for the activity level of 7,900 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.
11) bob is a quality inspector on the assembly line of a manufacturing company. he is
paid $16 per hour for regular time and time and a half for all work in excess of 40 hours
per week. he is classified as a direct labor worker.
bob’s employer offers fringe benefits that cost the company $4 for each hour of
employee time (both regular and overtime). during a given week, bob works 45 hours
but is idle for 2 hours due to material shortages. the company treats all fringe benefits as
part of manufacturing overhead. the allocation of bob’s wages and fringe benefits for
the week between direct labor cost and manufacturing overhead would be:
a.choice a
b.choice b
c.choice c
d.choice d
12) you are applying the scattergraph method and find that the regression line you have
drawn passes through a data point with the following coordinates: 1,000 units and
$9,600. the regression line passes through the y axis at the $600 point. which of the
following is the cost formula that represents the slope of this line?
a.y=$600+$9.00x
b.y=$600+$9.60x
c.y=$9,600+$.06x
d.none of these is true
13) selected financial data (in thousands of dollars) for barnstable company appear
below:
for year 2, the net income before taxes as a percentage of sales was:
a.10%
b.3%
c.8%
d.5%
14) the general model for calculating a quantity variance is:
a.actual quantity of inputs used x (actual price – standard price)
b.standard price x (actual quantity of inputs used – standard quantity allowed for output)
c.(actual quantity of inputs used at actual price) – (standard quantity allowed for output
at standard price)
d.actual price x (actual quantity of inputs used – standard quantity allowed for output)
15) garavaglia corporation’s balance sheet appears below:
required:
prepare a statement of cash flows using the indirect method.
16) letter corporation has two service departments (a and b) that provide service to each
other and to two operating departments (x and y). a provides 20% of its service to b,
30% of its service to x, and 50% of its service to y. b provides 10% of its service to a,
45% of its service to x, and 45% of its service to y. operating costs in a are $300,000.
operating costs in b are $180,000. cost allocations are made starting with department a.
no distinction is made between variable and fixed costs.
if service department costs are allocated using the direct method, what is the total
amount of service cost that will be allocated to x?
a.$172,000
b.$180,000
c.$198,000
d.$202,500
17) henifin corporation has provided the following data concerning its most important
raw material, compound k91j:
the raw material was purchased on account.
the credits to the raw materials account for january would total:
a.$21,981
b.$19,395
c.$38,790
d.$39,330
18) baken corporation applies manufacturing overhead on the basis of direct
labor-hours. at the beginning of the most recent year, the company based its
predetermined overhead rate on total estimated overhead of $172,140 and 3,800
estimated direct labor-hours. actual manufacturing overhead for the year amounted to
$171,000 and actual direct labor-hours were 3,880.
the overhead for the year was:
a.$4,764 overapplied
b.$3,624 underapplied
c.$4,764 underapplied
d.$3,624 overapplied
19) the constraint at artis corporation is time on a particular machine. the company
makes three products that use this machine. data concerning those products appear
below:
rank the products in order of their current profitability from most profitable to least
profitable. in other words, rank the products in the order in which they should be
emphasized.
a.ct,ln,si
b.si,ct,ln
c.ct,si,ln
d.ln,si,ct