Schleich Corporation’s most recent balance sheet appears below:
Net income for the year was $274. Cash dividends were $53. The company did not sell
or retire any property, plant, and equipment during the year. The net cash provided by
(used in) operating activities for the year was:
A. $286
B. $262
C. $391
D. $12
Answer:
Bahr Corporation has provided the following data for February.
Required:
a. Compute the budget variance for February. Show your work!
b. Compute the volume variance for February. Show your work!
Answer:
Deshaies Corporation is preparing its cash budget for November. The budgeted
beginning cash balance is $10,000. Budgeted cash receipts total $100,000 and budgeted
cash disbursements total $104,000. The desired ending cash balance is $30,000.
To attain its desired ending cash balance for November, the company should borrow:
A. $36,000
B. $30,000
C. $24,000
D. $0
Answer:
Galino Company, which has only one product, has provided the following data
concerning its most recent month of operations:
The total gross margin for the month under the absorption costing approach is:
A. $49,400
B. $18,200
C. $73,400
D. $124,800
Answer:
Puchalla Corporation sells a product for $230 per unit. The product’s current sales are
13,400 units and its break-even sales are 10,720 units. The margin of safety as a
percentage of sales is closest to:
A. 20%
B. 25%
C. 80%
D. 75%
Answer:
Reference: 8-18
Brothern Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its flexible budgets. During May, the company budgeted
for 6,800 units, but its actual level of activity was 6,820 units. The company 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 net operating income in the planning budget for May would be closest to:
A) $22,149
B) $22,279
C) $24,204
D) $23,960
Answer:
The manufacturing overhead budget at Mahapatra Corporation is based on budgeted
direct labor-hours. The direct labor budget indicates that 7,900 direct labor-hours will
be required in May. The variable overhead rate is $9.50 per direct labor-hour. The
company’s budgeted fixed manufacturing overhead is $112,970 per month, which
includes depreciation of $18,170. All other fixed manufacturing overhead costs
represent current cash flows.
The company recomputes its predetermined overhead rate every month. The
predetermined overhead rate for May should be:
A. $14.30
B. $21.50
C. $9.50
D. $23.80
Answer:
The Chase Company uses a standard cost system in which manufacturing overhead
costs are applied to products on the basis of standard machine-hours. For November, the
company’s flexible budget for manufacturing overhead showed the following total
budgeted costs at the denominator activity level of 40,000 machine-hours:
During November 42,000 machine-hours were used to complete 13,200 units of product
with the following actual overhead costs:
The standard time allowed to complete one unit of product is 3.6 machine-hours.
The total predetermined overhead rate per machine-hour for November was:
A. $1.75
B. $2.40
C. $2.97
D. $1.40
Answer:
Soehl Natural Dying Corporation measures its activity in terms of skeins of yarn dyed.
Last month, the budgeted level of activity was 14,100 skeins and the actual level of
activity was 13,700 skeins. The companys owner budgets for dye costs, a variable cost,
at $0.40 per skein. The actual dye cost last month was $4,510. What would have been
the spending variance for dye costs last month?
A) $970 F
B) $132 F
C) $160 F
D) $1,130 F
Answer:
Galino Company, which has only one product, has provided the following data
concerning its most recent month of operations:
The total contribution margin for the month under the variable costing approach is:
A. $124,800
B. $49,400
C. $20,400
D. $143,000
Answer:
Atwich Corporation uses the weighted-average method in its process costing system.
This month, the beginning inventory in the first processing department consisted of 600
units. The costs and percentage completion of these units in beginning inventory were:
A total of 5,100 units were started and 4,400 units were transferred to the second
processing department during the month. The following costs were incurred in the first
processing department during the month:
The ending inventory was 75% complete with respect to materials and 10% complete
with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
What are the equivalent units for conversion costs for the month in the first processing
department?
A. 4,400
B. 4,530
C. 130
D. 5,700
Answer:
Oscarson Midwiferys cost formula for its wages and salaries is $2,720 per month plus
$351 per birth. For the month of September, the company planned for activity of 121
births, but the actual level of activity was 119 births. The actual wages and salaries for
the month was $43,380. The wages and salaries in the planning budget for September
would be closest to:
A) $45,191
B) $43,380
C) $44,489
D) $44,109
Answer:
Consider the following production and cost data for two products, X and Y:
The company has 15,000 machine hours available each period, and there is unlimited
demand for each product. What is the largest possible total contribution margin that can
be realized each period?
A. $120,000
B. $125,000
C. $135,000
D. $150,000
Answer:
Chae Corporation uses the weighted-average method in its process costing system. This
month, the beginning inventory in the first processing department consisted of 500
units. The costs and percentage completion of these units in beginning inventory were:
A total of 8,100 units were started and 7,500 units were transferred to the second
processing department during the month. The following costs were incurred in the first
processing department during the month:
The ending inventory was 80% complete with respect to materials and 75% complete
with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
What are the equivalent units for conversion costs for the month in the first processing
department?
A. 8,600
B. 825
C. 7,500
D. 8,325
Answer:
Reference: 8A-12
The Chase Company has a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours (DLHs). The company recorded the
following activity and cost data relating to manufacturing overhead for October:
The amount of fixed manufacturing overhead cost that was estimated for September
was:
A) $45,900
B) $54,768
C) $49,920
D) $47,703
Answer:
Which one of the following costs should NOT be considered a direct cost of serving a
particular customer who orders a customized personal computer by phone directly from
the manufacturer?
A. the cost of the hard disk drive installed in the computer.
B. the cost of shipping the computer to the customer.
C. the cost of leasing a machine on a monthly basis that automatically tests hard disk
drives before they are installed in computers.
D. the cost of packaging the computer for shipment.
Answer:
Denise Corporations standard wage rate is $14.40 per direct labor-hour (DLH) and
according to the standards, each unit of output requires 7.0 DLHs. In May, 5,200 units
were produced, the actual wage rate was $13.70 per DLH, and the actual hours were
36,520 DLHs. The Labor Efficiency Variance for May would be recorded as a:
A) credit of $1,644.
B) credit of $1,728.
C) debit of $1,728.
D) debit of $1,644.
Answer:
The Labor Rate Variance for December would be recorded as a:
A) Credit of $9,086
B) Debit of $9,086
C) Credit of $8,428
D) Debit of $8,428
Answer:
The most recent balance sheet and income statement of Marroquin Corporation appear
below:
The company paid a cash dividend and it did not dispose of any property, plant, and
equipment. The company did not issue any bonds payable or repurchase any of its own
common stock. The following question pertain to the company’s statement of cash
flows.
The net cash provided by (used in) operating activities for the year was:
A. $264
B. $149
C. $221
D. $36
Answer:
Forker Corporation has provided the following data concerning its direct labor costs for
April:
The Labor Efficiency Variance for April would be recorded as a:
A) debit of $54,634.
B) debit of $57,875.
C) credit of $54,634.
D) credit of $57,875.
Answer:
Electrical costs at one of Reifel Corporation’s factories are listed below:
Management believes that electrical cost is a mixed cost that depends on
machine-hours.
Using the high-low method, the estimate of the variable component of electrical cost
per machine-hour is closest to:
A. $0.12
B. $20.38
C. $7.98
D. $8.22
Answer:
Two products, IF and RI, emerge from a joint process. Product IF has been allocated
$25,300 of the total joint costs of $46,000. A total of 2,000 units of product IF are
produced from the joint process. Product IF can be sold at the split-off point for $11 per
unit, or it can be processed further for an additional total cost of $10,000 and then sold
for $13 per unit. If product IF is processed further and sold, what would be the effect on
the overall profit of the company compared with sale in its unprocessed form directly
after the split-off point?
A. $31,300 less profit
B. $6,000 less profit
C. $16,000 more profit
D. $19,300 more profit
Answer:
Last year, Nye Company reported on its income statement sales of $475,000 and cost of
goods sold of $240,000. During the year, the balance in accounts receivable increased
$40,000, the balance in accounts payable decreased $25,000, and the balance in
inventory increased $10,000. The company uses the direct method to determine the net
cash provided by operating activities on its statement of cash flows.
Under the direct method, sales adjusted to a cash basis would be:
A. $435,000
B. $455,000
C. $515,000
D. $375,000
Answer:
The FIFO method provides a major advantage over the weighted-average method in
that:
A. the calculation of equivalent units is less complex under the FIFO method.
B. the FIFO method treats units in the beginning inventory as if they were started and
completed during the current period.
C. the FIFO method provides measurements of work done during the current period.
D. the weighted-average method ignores units in the beginning and ending work in
process inventories.
Answer:
The overall revenue and spending variance (i.e., the variance for net operating income
in the revenue and spending variance column) for September would be closest to:
A) $3,200 F
B) $3,470 F
C) $3,200 U
D) $3,470 U
Answer:
Entin Corporation reported the following data for the month of January:
The adjusted cost of goods sold that appears on the income statement for January is:
A. $197,000
B. $200,000
C. $201,000
D. $199,000
Answer:
At a sales level of $90,000, Blue Company’s contribution margin is $24,000. If the
degree of operating leverage is 6 at a $90,000 sales level, net operating income must
equal:
A. $15,000
B. $11,000
C. $4,000
D. $20,000
Answer:
Nyman Company successfully switched to a lean production system at the beginning of
March. Therefore, as shown by the summary below, there were no work in process
inventories on hand at the end of the month.
If Nyman continues to successfully employ lean production and starts 140,000 units
into production during April (the next month), the April equivalent units for conversion
costs using the weighted-average method would be:
A. 150,000 units
B. 140,000 units
C. 190,000 units
D. 160,000 units
Answer:
Overapplied manufacturing overhead occurs when:
A. applied overhead exceeds actual overhead.
B. applied overhead exceeds estimated overhead.
C. actual overhead exceeds estimated overhead.
D. budgeted overhead exceeds actual overhead.
Answer:
Abe Company, which has only one product, has provided the following data concerning
its most recent month of operations:
The total gross margin for the month under the absorption costing approach is:
A. $319,200
B. $16,800
C. $226,800
D. $256,500
Answer:
The following data were supplied by Reader Corporation:
The break-even point in sales dollars is:
A. $470,000
B. $180,000
C. $420,000
D. $561,000
Answer:
Reference: 8A-17
Buell Corporation has provided the following data for June.
The budget variance for June is:
A) $5,740 F
B) $3,610 F
C) $3,610 U
D) $5,740 U
Answer:
The Malcolm Company uses a standard cost system in which manufacturing overhead
costs are applied to products on the basis of standard direct labor-hours (DLHs). The
standards call for 3 hours of direct labor per unit produced. The following data pertain
to the company’s manufacturing overhead for the month of July:
The volume variance for July is:
A. $1,131 F
B. $900 F
C. $1,131 U
D. $900 U
Answer: