1) Eliezrie Corporation makes a product with the following standard costs:
In January the company’s budgeted production was 7,400 units but the actual
production was 7,500 units. The company used 45,580 kilos of the direct material and
2,030 direct labor-hours to produce this output. During the month, the company
purchased 48,500 kilos of the direct material at a cost of $53,350. The actual direct
labor cost was $18,473 and the actual variable overhead cost was $7,714.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for January is:
A.$406 F
B.$450 F
C.$406 U
D.$450 U
2) Trainor Corporation uses activity-based costing to assign overhead costs to products.
Overhead costs have already been allocated to the company’s three activity cost pools as
follows: Processing, $29,200; Supervising, $13,000; and Other, $26,800. Processing
costs are assigned to products using machine-hours (MHs) and Supervising costs are
assigned to products using the number of batches. The costs in the Other activity cost
pool are not assigned to products. Activity data appear below:
What is the overhead cost assigned to Product G0 under activity-based costing?
A.$31,000
B.$9,100
C.$21,900
D.$34,500
3) Galla Corporation makes a product with the following standard costs:
The company budgeted for production of 2,400 units in June, but actual production was
2,500 units. The company used 19,850 pounds of direct material and 980 direct
labor-hours to produce this output. The company purchased 21,700 pounds of the direct
material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the
actual variable overhead rate was $1.80 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for June is:
A.$196 U
B.$200 F
C.$200 U
D.$196 F
4) Net operating income is defined as:
A.net income plus interest and taxes.
B.sales minus variable expenses.
C.sales minus variable expenses and traceable fixed expenses.
D.contribution margin minus traceable and common fixed expenses.
5) How much actual Order Fulfillment Department cost should not be allocated to the
operating divisions at the end of the year?
A.$31,175
B.$18,380
C.$12,795
D.$0
6) Data from Fontecchio Corporation’s most recent balance sheet appear below:
The corporation’s acid-test ratio is closest to:
A.0.35
B.0.15
C.0.68
D.0.79
7) Wall Corporation, which produces commercial safes, has provided the following
data:
Supplies cost is an element of variable manufacturing overhead.
The variable overhead efficiency variance for supplies is closest to:
A.$3,096 F
B.$52,966 U
C.$52,966 F
D.$3,096 U
8) In order to reduce its overall quality costs, a company should focus most of its efforts
on:
A.prevention costs.
B.appraisal costs.
C.internal failure costs.
D.external failure costs.
9) The debt-to-equity ratio at the end of Year 2 is closest to:
A.0.38
B.0.13
C.0.16
D.0.43
10) Refer to the original data in the problem. What is the current contribution margin
per unit for component D53 based on its selling price of $150 and its annual production
of 8,000 units?
A.$83 per unit
B.$118 per unit
C.$32 per unit
D.$120 per unit
11) Waltz Corporation has two divisions: Xi and Sigma. Data from the most recent
month appear below:
The company’s common fixed expenses total $65,100. The break-even in sales dollars
for Sigma Division is closest to:
A.$283,218
B.$379,037
C.$414,904
D.$131,685
12) The working capital at the end of Year 2 is:
A.$850
B.$770
C.$400
D.$80
13) Pohl Corporation uses a standard cost system in which manufacturing overhead is
applied on the basis of standard machine-hours. For June, the company’s manufacturing
overhead flexible budget showed the following total budgeted costs at a denominator
activity level of 20,000 machine-hours:
During June, 17,000 machine-hours were used to complete 13,000 units of product, and
the following actual total overhead costs were incurred:
At standard, each unit of finished product requires 1.4 hours of machine time.
The fixed manufacturing overhead budget variance (in total) for June was:
A.$3,230 F
B.$3,230 U
C.$1,180 F
D.$1,180 U
14) Zuppa Corporation currently maintains its own printing department. The annual
costs of running this department are as follows:
Somatic Copy Service has offered to provide Zuppa with all of its printing needs at a
total annual cost of $68,000. If Zuppa went with this offer, they would close down their
printing department. Except for 30% of the fixed costs, all of the annual printing
department costs above can be avoided if it was closed down. Based on this
information, would Zuppa be better off to keep its printing department or to shut it
down and take Somatic’s offer and by how much?
A) $4,000 better off to go with Somatic
B) $5,000 better off to keep the department
C) $20,000 better off to keep the department
D) $22,000 better off to go with Somatic
15) The company’s return on total assets for Year 2 is closest to:
A.1.38%
B.2.18%
C.1.37%
D.2.19%
16) Marst Corporation’s budgeted production in units and budgeted raw materials
purchases over the next three months are given below:
Two pounds of raw materials are required to produce one unit of product. The company
wants raw materials on hand at the end of each month equal to 30% of the following
month’s production needs. The company is expected to have 30,000 pounds of raw
materials on hand on January 1. Budgeted production for February should be:
A.60,000 units
B.54,000 units
C.84,000 units
D.108,000 units
17) Harris Corporation is a wholesaler that sells a single product. Management has
provided the following cost data for two levels of monthly sales volume. The company
sells the product for $84.40 per unit.
The best estimate of the total variable cost per unit is:
A) $77.00
B) $57.00
C) $69.50
D) $78.50
18) The company’s average collection period (age of receivables) for Year 2 is closest
to:
A.35.7 days
B.1.1 days
C.1.0 days
D.35.2 days
19) Keske Corporation has an activity-based costing system with three activity cost
pools-Machining, Order Filling, and Other. In the first stage allocations, costs in the two
overhead accounts, equipment depreciation and supervisory expense, are allocated to
the three activity cost pools based on resource consumption. Data used in the first stage
allocations follow:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling
costs are assigned to products using the number of orders. The costs in the Other
activity cost pool are not assigned to products. Activity data for the company’s two
products follow:
Finally, the costs of Machining and Order Filling are combined with the following sales
and direct cost data to determine product margins.
How much overhead cost is allocated to the Order Filling activity cost pool under
activity-based costing?
A.$21,400
B.$2,500
C.$22,900
D.$20,400
20) What is the maximum contribution margin the company can earn per month?
A.$70,476
B.$108,108
C.$78,540
D.$74,890
