1) spraque air uses two measures of activity, flights and passengers, in the cost formulas
in its budgets and performance reports. the cost formula for plane operating costs is
$40,520 per month plus $2,733 per flight plus $11 per passenger. the company expected
its activity in june to be 71 flights and 207 passengers, but the actual activity was 70
flights and 205 passengers. the actual cost for plane operating costs in june was
$239,580.
the spending variance for plane operating costs in june would be closest to:
a.$2,740 u
b.$5,495 u
c.$5,495 f
d.$2,740 f
2) hasleby hardwood floors installs oak and other hardwood floors in homes and
businesses. the company uses an activity-based costing system for its overhead costs.
the company has provided the following data concerning its annual overhead costs and
its activity based costing system:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
the amount of activity for the year is as follows:
a ‘square” is a measure of area that is roughly equivalent to 1,000 square feet.
required:
a. prepare the first-stage allocation of overhead costs to the activity cost pools by filling
in the table below:
b. compute the activity rates (i.e., cost per unit of activity) for the installing floors and
job support activity cost pools by filling in the table below:
c. compute the overhead cost, according to the activity-based costing system, of a job
that involves installing 2.5 squares.
3) roberts company produces a single product. during the year just ended, the
company’s net operating income under absorption costing was $3,000 lower than under
variable costing. the company sold 9,000 units during the year, and its variable costs
were $9 per unit, of which $3 was variable selling expense. if production cost is $11 per
unit under absorption costing every year, then how many units did the company
produce during the year?
a.8,000
b.10,000
c.9,600
d.8,400
4) irawan company, a retailer, had cost of goods sold of $200,000 last year. the
beginning inventory balance was $24,000 and the ending inventory balance was
$22,000. the company’s average sale period was closest to:
a.41.98 days
b.83.95 days
c.43.80 days
d.40.15 days
5) suppose that the company decides that the present activity-based costing system is
too complex and that all costs (except for the costs of purchased decorations) should be
allocated on the basis of the number of guests. in that event, what would you expect to
happen to the costs of cakes?
a.the cost of cakes for receptions with more than the average number of guests would
go down
b.the costs of all cakes would go up
c.the cost of cakes for receptions with fewer than the average number of guests would
go down
d.the costs of all cakes would go down
6) harstin corporation has provided the following data:
the return on investment for the past year was:
a.28%
b.20%
c.36%
d.8%
7) at an activity level of 7,900 machine-hours in a month, manchester corporation’s total
variable maintenance cost is $430,550 and its total fixed maintenance cost is $417,120.
what would be the average fixed maintenance cost per unit at an activity level of 8,000
units in a month? assume that this level of activity is within the relevant range.
a.$52.14
b.$70.75
c.$52.80
d.$107.30
8) the information below was obtained from the records of the first processing
department of christine corporation for the month of july. the company uses the
weighted-average method in its process costing system.
all materials are added at the beginning of the manufacturing process.
the equivalent units for material for the month is:
a.70,000
b.90,000
c.80,000
d.82,500
9) baugus corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during august, the
company budgeted for 6,900 units, but its actual level of activity was 6,950 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for august:
the direct materials in the flexible budget for august would be closest to:
a.$127,650
b.$128,575
c.$127,581
d.$129,436
10) parker company has two service departments, cafeteria and engineering, and two
operating departments. the number of employees in each department is given below:
the costs of the cafeteria are allocated to other departments on the basis of the number
of employees in the departments. if these costs are budgeted at $69,375, the amount of
cost allocated to engineering under the direct method would be:
a.$0
b.$3,700
c.$3,750
d.$17,344
11) elder company, which has only one product, has provided the following data
concerning its most recent month of operations:
what is the net operating income for the month under absorption costing?
a.$(27,400)
b.$5,600
c.$9,800
d.$15,400
12) biancuzzo corporation has provided the following data from its most recent balance
sheet:
the debt-to-equity ratio is closest to:
a.5.60
b.0.85
c.6.60
d.0.18
13) the dexon company makes and sells a single product called a mip and uses a
standard costing system. the following standards have been established for one unit of
mip:
there were no inventories of any kind on august 1. during august, the following events
occurred:
purchased 15,000 board feet at the total cost of $24,000.
used 12,000 board feet to produce 2,100 mips.
used 1,700 hours of direct labor time at a total cost of $20,060.
to record the use of direct materials in production, the general ledger would include
what entry to the materials quantity variance account?
a.$3,600 debit
b.$3,600 credit
c.$900 debit
d.$900 credit
14) rappaport corporation reported the following data for the month of february:
the cost of goods manufactured for february is:
a.$220,000
b.$238,000
c.$241,000
d.$223,000
15) transportation costs incurred by a manufacturing company to ship its product to its
customers would be classified as which of the following?
a.product cost
b.manufacturing overhead
c.period cost
d.administrative cost
16) the statement of cash flows:
a.serves as a replacement for the income statement and balance sheet
b.shows the sources and uses of cash at one point in time
c.shows the sources and uses of cash for one period of time
d.is both a and b above