1) Fortmann 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 September, the kennel
budgeted for 2,000 tenant-days, but its actual level of activity was 2,010 tenant-days.
The kennel has provided the following data concerning the formulas to be used in its
budgeting:
The activity variance for wages and salaries in September would be closest to:
A.$595 U
B.$595 F
C.$75 U
D.$75 F
2) Brummitt Corporation has two divisions: the BAJ Division and the CBB Division.
The corporation’s net operating income is $10,700. The BAJ Division’s divisional
segment margin is $76,100 and the CBB Division’s divisional segment margin is
$42,300. What is the amount of the common fixed expense not traceable to the
individual divisions?
A.$86,800
B.$107,700
C.$53,000
D.$118,400
3) Two or more products produced from a common input are called:
A.common costs.
B.joint products.
C.joint costs.
D.sunk costs.
4) The Thornes Cleaning Brigade Company provides housecleaning services to its
clients. The company uses an activity-based costing system for its overhead costs. The
company has provided the following data from its activity-based costing system.
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
One particular client, the Lazzara family, requested 37 jobs during the year that required
a total of 222 hours of housecleaning. For this service, the client was charged $2,350.
Required:
a. Using the activity-based costing system, compute the customer margin for the
Lazzara family. Round off all calculations to the nearest whole cent.
b. Assume the company decides instead to use a traditional costing system in which
ALL costs are allocated to customers on the basis of cleaning hours. Compute the
margin for the Lazzara family. Round off all calculations to the nearest whole cent.
5) The following information relates to the Quilt Division of TDS Corporation for last
year:
What was the Quilt Division’s return on investment (ROI) for last year?
A.13%
B.18%
C.40%
D.45%
6) Linzey Corporation has provided the following data:
The company’s net income in Year 2 was $33,000. The company’s book value per share
at the end of Year 2 is closest to:
A.$22.45 per share
B.$12.45 per share
C.$0.55 per share
D.$15.45 per share
7) Which of the following terms could be used to correctly describe the wages paid to
the workers that cut up the cloth into the jean pattern shapes?
Conversion Cost Variable Cost
A) Yes Yes
B) Yes No
C) No Yes
D) No No
8) If Madison has a limit of 10,000 direct labor hours but no limit on machine hours,
then the ranking of the products from the most profitable to the least profitable use of
the constrained resource is:
A) A, B, C
B) B, C, A
C) C, A, B
D) A, C, B
9) Which of the following is correct regarding the operating activities section of the
statement of cash flows?
A.The change in Prepaid Expenses will be added to net income; The change in Income
Taxes Payable will be subtracted from net income
B.The change in Prepaid Expenses will be subtracted from net income; The change in
Income Taxes Payable will be subtracted from net income
C.The change in Prepaid Expenses will be subtracted from net income; The change in
Income Taxes Payable will be added to net income
D.The change in Prepaid Expenses will be added to net income; The change in Income
Taxes Payable will be added to net income
An increase in a current asset such as prepaid expenses is subtracted from net income.
10) The best estimate of the total monthly fixed cost is:
A) $692,200
B) $725,400
C) $659,000
D) $327,000
11) Selling used equipment at book value for cash will:
A.increase working capital.
B.decrease working capital.
C.decrease the debt-to-equity ratio.
D.increase net income.
12) Which of the following is not an effective way of dealing with a production
constraint (i.e., bottleneck)?
A.Reduce the number of defective units produced at the bottleneck.
B.Pay overtime to workers assigned to the bottleneck.
C.Pay overtime to workers assigned to work stations located after the bottleneck in the
production process.
D.Subcontract work that would otherwise require use of the bottleneck.
13) Stimac Corporation has total cash of $210,000, no marketable securities, total
current receivables of $281,000, total inventory of $151,000, total prepaid expenses of
$53,000, total current assets of $695,000, total current liabilities of $261,000, total
stockholders’ equity of $1,014,000, total assets of $1,415,000, and total liabilities of
$401,000. The company’s acid-test (quick) ratio is closest to:
A.2.08
B.1.73
C.2.66
D.1.88
14) The net cash provided by (used in) financing activities last year was:
A.$(104,000)
B.$104,000
C.$(60,000)
D.$60,000