1) (ignore income taxes in this problem.) boston company is contemplating the
purchase of a new machine on which the following information has been gathered:
the company’s discount rate is 16%, and the machine will be depreciated using the
straight-line method. given these data, the machine has a net present value of:
a.-$26,100
b.-$23,900
c.$0
d.+$26,100
2) hopp corporation uses the direct method to allocate service department costs to
operating departments. the company has two service departments, data processing and
personnel, and two operating departments, assembly and finishing.
data processing department costs are allocated on the basis of computer workstations
and personnel department costs are allocated on the basis of employees. the total
amount of data processing department cost allocated to the two operating departments
is closest to:
a.$29,871
b.$82,720
c.$34,689
d.$21,946
3) rymore company would like to classify the following costs according to their cost
behavior:
which of the following classifications best describes the behavior of cost a?
a.mixed
b.variable
c.fixed
d.none of these
4) sullens inc, which produces and sells a single product, has provided its contribution
format income statement for july.
if the company sells 8,600 units, its total contribution margin should be closest to:
a.$113,400
b.$111,800
c.$110,500
d.$24,788
5) the management of degenhart corporation, a manufacturing company, has provided
the following data for february:
the contribution margin for february was:
a.$34,000
b.$323,000
c.$191,000
d.$310,000
6) arston company’s net income last year was $300,000. the company has 150,000
shares of common stock and 60,000 shares of preferred stock outstanding. there was no
change in the number of common or preferred shares outstanding during the year. the
company declared and paid dividends last year of $1.50 per share on the common stock
and $0.60 per share on the preferred stock. the earnings per share of common stock is
closest to:
a.$2.00
b.$1.76
c.$0.50
d.$2.24
7) faust corporation has provided its contribution format income statement for august.
if the company’s sales increase by 10%, its net operating income should increase by
about:
a.5%
b.72%
c.10%
d.189%
8) drake company purchased materials on account. the entry to record the purchase of
materials having a standard cost of $1.50 per pound from a supplier at $1.60 per pound
would include a:
a.credit to raw materials inventory
b.debit to work in process
c.credit to materials price variance
d.debit to materials price variance
9) a furniture manufacturer has a standard costing system based on standard direct
labor-hours (dlhs) as the measure of activity. data from the company’s 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.$313 u
b.$607 f
c.$920 f
d.$513 f
10) luft company uses the weighted-average method in its process costing system.
operating data for the first processing department for the month of june appear below:
according to the company’s records, the conversion cost in beginning work in process
inventory was $79,893 at the beginning of june. additional conversion costs of
$343,830 were incurred in the department during the month.
what was the cost per equivalent unit for conversion costs for the month? (round off to
three decimal places.)
a.$8.070
b.$7.891
c.$5.928
d.$4.584
11) zoopsia hospital has two service departments and three operating departments.
selected information on the five departments for last year is as follows:
zoopsia allocates power generation cost first on the basis of kilowatt hours. zoopsia
then allocates laundry cost on the basis of the number of employees. operating costs in
power generation for last year were $250,000. operating costs in laundry for last year
were $60,000. no distinction is made between variable and fixed costs.
if service department costs are allocated using the step-down method, how much
service cost will remain in the power generation department after allocation?
a.$0
b.$6,750
c.$12,375
d.$12,500
12) springmeyer clinic uses client-visits as its measure of activity. during august, the
clinic budgeted for 2,900 client-visits, but its actual level of activity was 2,940
client-visits. the clinic has provided the following data concerning the formulas used in
its budgeting and its actual results for august:
the administrative expenses in the planning budget for august would be closest to:
a.$7,594
b.$7,590
c.$7,165
d.$7,264