1) Assume that wages expense is a variable cost and that the relevant range is 10,000 to
15,000 labor hours. Within that range, the cost is $14 per hour. What can you assume
about wages expense outside this range?
2) In which section of the balance sheet would Treasury Stock be reported?
3) Company A makes and sells a single product. For each of the following changes,
indicate whether the break-even point increases (i.e., break even would occur at a
higher volume of sales), decreases, is not affected, or the direction of change cannot be
determined from the information given. Assume that nothing changes except the given
item(s).
What happens to break-even volume when the sales price per unit increases?
4) Indicate whether each of the following statements is true or false.
1>The payback method does not take the time value of money into account
2>The payback period can only be calculated for capital investments that are expected
to provide equal annual cash inflows over their useful lives
3>Generally, investments with shorter payback periods are preferred
4>Use of the payback method by itself to analyze capital investments does not do a
good job of identifying the projects that will make the greatest contribution to a
company’s profits
5>The unadjusted rate of return indicates the length of time required to recover the
initial cost of an investment
5) What is a primary drawback with examining and comparing absolute amounts from
two businesses’ financial statements?
6) The Graham Company is trying to decide whether to replace a packing machine that
it uses to pack salsa into individual serving size packages. The following information is
provided:
New Machine:
Required:
Compute the total advantage or disadvantage of buying the new machine. Do not take
depreciation into account.
7) Matching. Select the term from the list provided that bests describes each of the
following descriptions.
8) For 2012, the Hilary Corporation had beginning and ending Retained Earnings
balances of $198,054 and $231,000, respectively. Also during 2012, the corporation
declared and paid cash dividends of $29,000 and issued stock dividends valued at
$16,000. Assuming that no other items affected Retained Earnings and that total
expenses were $32,916, what was the amount of revenues for 2012?