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1) The net present value of the proposed project is closest to:
A.$154,663
B.$322,000
C.$117,796
D.$245,246
( The Sawyer Corporation has $80,000 to invest and is considering two different
projects, X and Y. The following data are available on the projects:
Both projects will have a useful life of 5 years; at the end of 5 years, the working capital
will be released for use elsewhere. Sawyer's discount rate is 12%.
2) Berends Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in April.
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 labor rate variance for April is:
A.$4,224 F
B.$4,224 U
C.$4,096 U
D.$4,096 F
3) Sturr Market has 3 stores: P, Q, and R. During October, Store P had a contribution
margin of $24,000 and a contribution margin ratio of 30%. Store Q had variable
expenses of $48,000 and a contribution margin ratio of 40%. Store R had variable
expenses of $84,000 and a variable expense ratio of 70% of sales. Sturr Market's total
sales were:
A.$320,000
B.$360,000
C.$440,000
D.$280,000
4) The following information relates to Conejo Corporation for last year:
What is Conejo's price-earnings ratio for last year?
A.1.6
B.2.4
C.8.0
D.2.0
5) Rawe Corporation's accounts receivable at the end of Year 2 was $329,000 and its
accounts receivable at the end of Year 1 was $280,000. Sales, all on account, amounted
to $1,350,000 in Year 2. The company's average collection period (age of receivables)
for Year 2 is closest to:
A.1.2 days
B.1.0 days
C.82.4 days
D.89.0 days
6) Kerbow Corporation uses part B76 in one of its products. The company's Accounting
Department reports the following costs of producing the 12,000 units of the part that are
needed every year.
An outside supplier has offered to make the part and sell it to the company for $27.40
each. If this offer is accepted, the supervisor's salary and all of the variable costs,
including direct labor, can be avoided. The special equipment used to make the part was
purchased many years ago and has no salvage value or other use. The allocated general
overhead represents fixed costs of the entire company. If the outside supplier's offer
were accepted, only $6,000 of these allocated general overhead costs would be avoided.
In addition, the space used to produce part B76 could be used to make more of one of
the company's other products, generating an additional segment margin of $29,000 per
year for that product.
Required:
a. Prepare a report that shows the effect on the company's total net operating income of
buying part B76 from the supplier rather than continuing to make it inside the company.
b. Which alternative should the company choose?
7) A manufacturer of playground equipment uses a standard costing system in which
standard machine-hours (MHs) is the measure of activity. Data from the company's
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
The fixed manufacturing overhead volume variance for the period is closest to:
A.$2,256 F
B.$2,331 F
C.$3,089 U
D.$5,420 F
8) Maintenance costs at a Whetsel Corporation factory are listed below:
Management believes that maintenance cost is a mixed cost that depends on
machine-hours. Use the high-low method to estimate the variable and fixed components
of this cost. Compute the variable component first and round off to the nearest whole
cent. Compute the fixed component second and round off to the nearest whole dollar.
These estimates would be closest to:
A) $8.86 per machine-hour; $20,577 per month
B) $0.11 per machine-hour; $48,192 per month
C) $15.48 per machine-hour; $48,103 per month
D) $8.81 per machine-hour; $20,718 per month
9) Which of the intermediate products should be processed further?
A) beet fiber should be processed into industrial fiber; beet juice should be processed
into refined sugar
B) beet fiber should NOT be processed into industrial fiber; beet juice should NOT be
processed into refined sugar
C) beet fiber should be processed into industrial fiber; beet juice should NOT be
processed into refined sugar
D) beet fiber should NOT be processed into industrial fiber; beet juice should be
processed into refined sugar
10) Mcrae Corporation's total current assets are $380,000, its noncurrent assets are
$500,000, its total current liabilities are $340,000, its long-term liabilities are $250,000,
and its stockholders' equity is $290,000. Working capital is:
A.$380,000
B.$40,000
C.$250,000
D.$290,000
11) Aaker Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the total period cost for the month under the absorption costing?
A.$170,100
B.$60,000
C.$230,100
D.$24,000
12) Anderson Corporation has provided the following production and average cost data
for two levels of monthly production volume. The company produces a single product.
The best estimate of the total monthly fixed manufacturing cost is:
A) $388,000
B) $954,800
C) $376,000
D) $328,000
13) A manufacturer of premium wire strippers has supplied the following data:
The company's unit contribution margin is closest to:
A.$2.60 per unit
B.$4.60 per unit
C.$3.50 per unit
D.$6.30 per unit
14) In November, one of the processing departments at Goodsell Corporation had
beginning work in process inventory of $36,000 and ending work in process inventory
of $35,000. During the month, $427,000 of costs were added to production and the cost
of units transferred out from the department was $428,000. The company uses the FIFO
method in its process costing system. In the department's cost reconciliation report for
November, the total cost to be accounted for would be:
A.$890,000
B.$71,000
C.$463,000
D.$926,000
15) The total cash flow net of income taxes in year 2 is:
A.$72,000
B.$90,000
C.$18,000
D.$60,000
16) Richards Corporation has the following budgeted sales for the first half of next
year:
The company is in the process of preparing a cash budget and must determine the
expected cash collections by month. To this end, the following information has been
assembled:
The accounts receivable balance on January 1 is $70,000. Of this amount, $60,000
represents uncollected December sales and $10,000 represents uncollected November
sales.
What is the budgeted accounts receivable balance on May 30?
A.$81,000
B.$68,000
C.$60,000
D.$141,000
17) Which of the following benefits could an organization reasonably expect from an
effective budget program?
A.Option A
B.Option B
C.Option C
D.Option D
18) Acklac Corporation uses the weighted-average method in its process costing
system. This month, the beginning inventory in the first processing department
consisted of 700 units. The costs and percentage completion of these units in beginning
inventory were:
A total of 9,200 units were started and 8,300 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 15% 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.
The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A.$22.40
B.$20.28
C.$21.14
D.$21.49
