1) Pearse Kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. During December, the kennel budgeted
for 3,000 tenant-days, but its actual level of activity was 2,980 tenant-days. The kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for December:
Data used in budgeting:
Actual results for December:
The net operating income in the flexible budget for December would be closest to:
A.$11,200
B.$11,400
C.$11,960
D.$12,121
2) Redstone Corporation produces a single product and has the following cost structure:
Required:
a. Compute the unit product cost under absorption costing. Show your work!
b. Compute the unit product cost under variable costing. Show your work!
3) Yehle Inc. regularly uses material Y51B and currently has in stock 460 liters of the
material for which it paid $2,530 several weeks ago. If this were to be sold as is on the
open market as surplus material, it would fetch $4.55 per liter. New stocks of the
material can be purchased on the open market for $5.45 per liter, but it must be
purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of
720 liters of the material to be used in a job for a customer. The relevant cost of the 720
liters of material Y51B is:
A.$3,924
B.$5,450
C.$3,510
D.$3,276
4) Shipley Corporation has provided the following data from its most recent balance
sheet:
The debt-to-equity ratio is closest to:
A.0.29
B.3.47
C.0.22
D.0.78
5) The following standards for variable manufacturing overhead have been established
for a company that makes only one product:
The following data pertain to operations for the last month:
What is the variable overhead rate variance for the month?
A.$112 F
B.$130 U
C.$4,450 U
D.$4,338 U
6) Using the high-low method of analysis, the estimated variable cost per labor hour for
maintenance is closest to:
A.$0.83
B.$1.84
C.$1.30
D.$1.14
7) Blackner Corporation produces and sells a single product. Data concerning that
product appear below:
The break-even in monthly dollar sales is closest to:
A.$310,860
B.$1,195,920
C.$420,200
D.$642,400
8) Spincic Corporation has provided the following data:
The market price of common stock at the end of Year 2 was $4.13 per share. The
company’s price-earnings ratio for Year 2 is closest to:
A.0.52
B.8.10
C.6.16
D.12.52
9) Sharp Company has a process costing system. The following data relate to the
company’s Mixing Department for a recent month:
All materials are added at the beginning of the Mixing process.
Required:
a. Compute the equivalent units of production for materials and conversion using the
weighted-average method.
b. Compute the equivalent units of production for materials and conversion using the
FIFO method.
10) A company’s current ratio is greater than 1. Purchasing raw materials on credit
would:
A.increase the current ratio.
B.decrease the current ratio.
C.increase net working capital.
D.decrease net working capital.
11) A new product, an automated crepe maker, is being introduced at Miyake
Corporation. At a selling price of $73 per unit, management projects sales of 20,000
units. Launching the crepe maker as a new product would require an investment of
$400,000. The desired return on investment is 17%. The target cost per crepe maker is
closest to:
A.$69.60
B.$85.41
C.$81.43
D.$73.00
12) Kari Kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. During May, the kennel budgeted for
3,200 tenant-days, but its actual level of activity was 3,230 tenant-days. The kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for May:
Data used in budgeting:
Actual results for May:
The activity variance for administrative expenses in May would be closest to:
A.$9 U
B.$81 F
C.$9 F
D.$81 U
13) Dideda Corporation uses an activity-based costing system with three activity cost
pools. The company has provided the following data concerning its costs and its activity
based costing system:
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
You have been asked to complete the first-stage allocation of costs to the activity cost
pools.
How much cost, in total, should NOT be allocated to orders and products in the second
stage of the allocation process if the activity-based costing system is used for internal
decision-making?
A.$60,000
B.$0
C.$84,000
D.$120,000
14) Kamp Company uses the weighted-average method in its process costing.
Information about units processed during a recent month in the Curing Department
follow:
The beginning work in process inventory had $4,600 in conversion cost. During the
month, the Department incurred an additional $210,000 in conversion cost.
Required:
a. Determine the equivalent units of production for conversion for the month.
b. Determine the cost per equivalent unit of production for conversion for the month.
c. Determine the conversion cost assigned to the ending work in process inventory.
d. Determine the total conversion cost transferred out during the month.
15) Parker Company uses a job-order costing system and applies manufacturing
overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last
year manufacturing overhead and direct labor-hours were estimated at $50,000 and
20,000 hours, respectively, for the year. In June, Job #461 was completed. Materials
costs on the job totaled $4,000 and labor costs totaled $1,500 at $5 per hour. At the end
of the year, it was determined that the company worked 24,000 direct labor-hours for
the year and incurred $54,000 in actual manufacturing overhead costs.
Required:
a. Job #461 contained 100 units. Determine the unit product cost that would appear on
the job cost sheet.
b. Determine the underapplied or overapplied overhead for the year.
16) Grandolfo Corporation uses an activity-based costing system with three activity
cost pools. The company has provided the following data concerning its costs and its
activity based costing system:
How much cost, in total, would be allocated in the first-stage allocation to the Other
activity cost pool?
A.$168,000
B.$182,000
C.$128,000
D.$192,000
17) Windham Corporation has current assets of $400,000 and current liabilities of
$500,000. Windham Corporation’s current ratio would be increased by:
A.the purchase of $100,000 of inventory on account.
B.the payment of $100,000 of accounts payable.
C.the collection of $100,000 of accounts receivable.
D.refinancing a $100,000 long-term loan with short-term debt.